Pioneer Foods reported that its total interim revenue was up 6% to R10bn despite the loss of Pepsi to its US parent company along with the divestments of its biscuits and Maitland Vinegar businesses.

Aftertax profit doubled to R1bn from the matching period’s R545m, Pioneer said in its interim results statement.

The fast moving consumer goods group raised its interim dividend by 11% to 105c from the matching period’s 95c.

Pioneer is split into three divisions: essential foods, which contributed 61% of group revenue; groceries, which contributed 25%; and international, which contributed 14%.

"Essential foods delivered satisfactory results within bakeries and an excellent performance in rice," CEO Phil Roux said.

"The honed groceries portfolio performed exceptionally well, generating significant operating leverage resulting in a 35% increase in operating profit from R253m to R343m.

"The international segment achieved operating profit growth of 16%, notwithstanding volume and pricing pressure in certain African export destinations, augmented by a pleasing fruit result."

Capital expenditure of R349m was R53m higher than the comparative period. Major capital expansion projects include its Aeroton Bakery expansion, the installation of the additional Weet-Bix line, the Bokomo Foods UK plant relocation and the Duens Bakery upgrade. Total capital expenditure for the year, including replacement capital, is forecasted at R930m.

Essential foods’ revenue was up 8% to R6bn but operating profit fell 8% to R645m due the drought pushing up maize prices.

This division’s profitability also suffered from the import duty on wheat increasing from R156/tonne to R1,224/tonne. The duty now constitutes about 25% of the cost of wheat milled, the company said.

Revenue from its groceries division was up 7% to R2.5bn, while operating profit grew 35% to R343m.

Its international division showed the biggest revenue growth of 20% to R1.4bn. Export volumes increased 7%.

"Bokomo Foods UK delivered excellent growth in volume and revenue. The deliberate relocation of the muesli plant negatively impacted the first-half operating profit. The plant improvements will enable further volume growth and the fulfilment of demand. The devaluation of the rand further benefited the consolidated results of Bokomo Foods UK," the company said.

In contrast with competitor Tiger Brands, which reports its interim results on Tuesday, Pioneer appears to be doing well in Nigeria.

"The conservative investment in Food Concepts Pioneer in Nigeria continued to show progress, with its fix and optimise strategy, inclusive of systems integration, plant improvements and a new management team," Pioneer said.

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