Fines to whack Pioneer earnings

Johannesburg - Fines imposed on Pioneer Foods [JSE:PFG] by the Competition Tribunal will hit its interim earnings.

In a statement on Thursday, the listed food manufacturer said that earnings per share and headline earnings per share for the six months ending March 31 2010, were expected to decrease by between 50% and 70% from the previous corresponding period.

Shareholders were advised that Pioneer Foods had made a provision for a potential administrative penalty from the wheaten and white maize flour milling complaint referrals received from the Competition Commission in which Pioneer Foods and other industry participants were named as respondents.

The provision of R154m, applied a rate of 8.5% on the 2006 affected revenue from the selling of wheaten and white maize flour of R1 821.6m for that year, Pioneer Foods said.

"In doing so the company has followed approximately the same approach as the Competition Tribunal in determining the penalty in the bread matter, although the Competition Commission still maintains that they wish to impose a 10% administrative penalty on the 2009 group revenue."

The final amount therefore still needed to be determined, Pioneer Foods added.

This provision was in addition to the R196m provision raised by the company from the bread complaint referral, following the ruling of the Competition Tribunal on February 3.

"The Competition Commission has taken this ruling on appeal to the Competitions Appeal Court.

"Pioneer Foods has opposed the appeal and lodged a cross-appeal as indicated before."

The amount might therefore increase or decrease, Pioneer Foods said.

The company added that it wished to resolve the milling and other matters before the Competition Commission "through co-operation with the commission, and without recourse to proceedings currently before the Competition Tribunal, if possible."

Pioneer Foods noted that should none of the provisions be taken into account, an increase of between 45% and 65% was expected in earnings and headline earnings per share for the six months ending March 31 2010 over the previous corresponding period.

- Sapa