Pioneer benefits from rising prices

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Pioneer benefits from rising prices

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Published Date: 2019-02-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Pioneer benefits from rising prices

The branded food producer says while it managed to increase prices in some categories, input costs have also been on the rise.

Pioneer Foods has reported a decent rise in turnover for the four months to end-January, largely due to rising prices and higher sales volumes for a number of staples.

In a trading update ahead of its annual general meeting on Friday, the branded food producer said turnover increased by 7.8% over the period, excluding contributions from recently acquired sauce brand Wellington's and UK granola brand Lizi's. It said the growth was 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.

However, it warned that the positive contribution from turnover growth had been negated by rising raw material prices and other operational input costs, which have put pressure on its margins.

In its Essential Foods division, while bread did well, maize sales came under pressure, with volumes down and only marginal inflation. Pasta suffered due to cheap imports.

Its Groceries division also presented a mixed picture, with sales of long-life fruit juices rising. Cereal sales were flat after a strong performance last year.

Exports into neighbouring countries came under pressure due to weak economic conditions but fruit exports did well due to stronger demand and strengthening international dollar pricing due to lower global availability. Its UK business did well too, despite ongoing Brexit uncertainties.

Its shares closed 1.5% higher at R81.25 on Friday.





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