Maize contract and raisin shortage still plaguing Pioneer

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Maize contract and raisin shortage still plaguing Pioneer

Published Date: 2017-10-24 | Source: Stephen Gunnion | Author: Stephen Gunnion

Maize contract and raisin shortage still plaguing Pioneer

The food producer has flagged a sharp fall in full-year earnings

Pioneer Foods is still feeling the effect of an unfavourable maize contact it entered into last year. It says the contract muted the performance of its maize business until June. Since then, maize has been milled at market-related cost. Together with deflation, volume declines and resistance to price increases, the group expects a sharp drop in full-year earnings. It says the performance of its fruit export business suffered a double whammy: a shortage of raisin shortage in the first half of the year was further impacted by lower US dollar prices and a stronger rand.

Pioneer says the weak beverage exports experienced in key African markets in the first half due to the unfavourable economic situation in many countries continued into the second half. Local beverages volumes and margins suffered from lower year-on-year demand as well as increased competition. The share of profit from joint ventures contracted materially during the period. The performance in Botswana was significantly impacted by the unfavourable maize hedge position. Heinz's volumes also lagged expectations and it was unable to reduce its cost base to match the weaker volumes.

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The group says its other categories showed resilience during the difficult period, with the Aeroton bakery upgrade successfully commissioned in the second half and Snacks and Treats delivering a strong performance.

Overall, it's predicting a 50% to 58% decline in attributable earnings per share, while headline earnings per share will be down by between 48% and 56%. Adjusted headline earnings per share will be 43% to 51% lower. Its results are due for release towards the end of next month.

Pioneer's shares fell 2.9% to close at R114.55 yesterday.



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