Johannesburg - Food and beverage company Clover Industries [JSE:CLR] on Tuesday reported a 41% jump in first-half earnings on higher product prices, despite falling sales and market share.
"During this first six months we successfully recovered significant cost increases in raw milk and other costs incurred in the prior financial year. These cost increases also provide for expected inflationary cost increases during the current year," CEO Johann Vorster said in a statement.
"As a result, our gross margins, which deteriorated sharply in the exceptionally tough second half of last year, have been restored to normal levels. The increased selling prices and profitability did however impact on volumes as expected, resulting in market share contraction across most categories."
Clover, whose brands include Tropika juices, said headline earnings per share for the six months to December totalled 109.2 cents, from 77.3c in the year-ago period.
Clover said it increased prices of most of its products in June 2014 to recover revenue lost after prices of raw milk, a vital ingredient, rose.
The shortage of raw milk resulted in group sales dipping 3.2% as Clover, which sells milk products including cheese and yoghurt, could not supply the market.
The company raised its interim dividend by 41.3% to 22.6 cents.
Revenue increased by 7.9% from the previous corresponding six months to R4.7bn mainly as a result of selling price increases implemented in June.
Gross margins improved to 31% compared to the 28% reported in the comparative period.
Clover's operating margin increased to 6.9% from 5.4%.
Revenue from the sale of products increased by 11% to R4.1bn. Overall price inflation came to 14.2%.
Clover declared an interim dividend of 22.6 cents per share. This represented a 41.3% increase, in line with the growth in headline earnings per share over the interim dividend of 16c per share paid in April 2014.