Johannesburg - Investors were keen to add Pioneer Foods to their portfolios on Monday, after the group defied the overall economic trend with "solid" growth figures.

The producer of Sasko, Liqui Fruit and Bokomo reported diluted annual headline earnings per share of 349.8 cents, from 285.3 cents a year ago (up 22%).

By close of trading, Pioneer was 6.83% higher at 3 740 cents per share.

CEO André Hanekom said an excellent performance from Sasko (bread) improved the group's utilisation of capacity, with increased sales volumes in maize products in particular.

"Sasko has experienced strong growth in this and previous reporting periods and is well positioned for further growth, albeit at a slower rate given the relatively high comparative base," Hanekom said.

However, lower food inflation saw its revenue growth remain flat during the second half of the year, after posting a 20% rise in the first six month.

It said a mixture of increased and largely sustained sales volumes buffered the decrease in selling prices. Also, better cost recovery in finished product prices improved the operating profit margin from 5.8% to 7.1%.

"The demand for staple food products remained resilient despite the overall decline in economic activity," the group said. However, the upward and downward pressures on input costs continued during the year with increasing electricity, labour and rail costs weighing down the benefit of lower grain and fuel prices.

The Bokomo division recorded a disappointing performance compared to last year as cash-strapped consumers turned to lower margin products. Hanekom, nevertheless, said Bokomo remained a "stable and good business" with growth prospects.

The fruit juice category achieved volume growth on the back of higher export sales volumes. The construction of a fruit juice factory in Wadeville has also commenced.

Pioneer said the next reporting year will be influenced by volatility in raw material prices and other cost increases. At the same time, volumes and margins will be driven by changing consumer patterns and deflationary pressures on selling prices.

John Thompson, retail analyst at Investec Asset Management said the results were "solid", but agreed that the year ahead was going to be a tough period with volumes coming under pressure.

- Fin24.com