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Pioneer Foods boosted by higher prices

| Supplier news

Company beats muted consumer demand and spend which exerted pressure on its operating margins as well as uncertainty over Brexit

Higher prices  of bread, wheat flour, rice and export fruit boosted branded foods and beverages producer Pioneer Foods’ performance in the four months ended January 31.

This is despite the muted consumer demand and spend which exerted pressure on the company’s operating margins as well as uncertainty about Brexit, which could affect its UK business.

In the four months ended-January, the owner of Bokomo, Sasko, Weet-Bix and White Star brands increased turnover by 7.8%, the company said in a trading update on Friday.

“The growth is primarily driven by price inflation in bread, wheat flour, rice and export fruit as well as sound volume growth in local beverages, bread, rice and breakfast cereals in the UK,” Pioneer Foods said.

The company said its essential foods division, which houses maize and wheat products, saw “excellent” volume growth from bread as well as bread and wheat flour inflation.

Volumes growth in the maize category, however, slowed. This is contrary to the strong performance in the first half of the 2018 financial year in which the maize category boosted the essential foods division.

The balance of the essential foods basket, with the exception of pasta, delivered sound revenue and volume improvement over the prior year. Pioneer Foods said the pasta category remained exposed to the growing share of lower-priced imports.

The groceries division, which offers a range of breakfast cereals, dried fruit and vegetables, beverages and biscuits, experienced growth in volumes in the four months.

“The volume performance of cereals was flat compared to the previous year, after particularly strong volume growth in the corresponding prior period. The balance of the groceries basket had a more challenging time with volumes flat or marginally down over the previous year,” Pioneer said. 

At the end of the 2018 financial year in September 2018 , Pioneer's market capitalisation was R21.5bn.

Exports into neighbouring countries experienced negative growth reflecting the  weak economic conditions, the company said. But fruit exports continued to perform well on stronger demand and strengthening international dollar pricing due to lower global availability.

Pioneer said its UK business had done well, despite ongoing Brexit uncertainties, with acceptable volume growth in the face of increased input cost inflation. The company's wholly owned Bokomo Foods UK is part of the international business which contributed R3.2bn to the group’s revenue in 2018.

It said its Nigerian business performed to expectation.  




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