Pioneer Foods [JSE:PFG] on Monday reported a turnover dip of 3% in half year earnings from R10.2bn to R9.9bn, due to price deflation in soft commodities such as maize.
Earnings per share increased by 34% to 332.5 cents and headline earnings per share went up 30% to 317.1 cents per share.
“The business achieved 70% operating profit growth through a strong maize performance, as well as pasta and rice profit expansion,” Pioneer said in a statement.
Adjusted operating profit jumped 36% to R949m.
Pioneer's share price jumped almost 3% in early trade, but gave up some of the gains to trade 1.13% firmer at R106.62 by 10:09 on the JSE.
Pioneer Foods is one of the country’s largest producer and distributor of branded food and beverage products, including Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari and Spekko rice.
The company said its maize meal brand, White Star, had retained its market leading position.
Flour and bread came under pressure on the back of weaker demand and a more competitive environment.
The group is recovering from the effects of a severe drought that hit parts of the country in the last two years.
In a bid to improve its market position, the company has revamped its facilities, including the commissioning of its additional baking capacity in KwaZulu-Natal, which was commissioned in April 2018.
Upgrades at the Durban wheat mill were underway, geared to enhance value chain competitiveness from 2019.
In December, the group acquired the UK-based breakfast cereal entity, Good Carb Food Company. It said the full acquisition was in line with its international expansion.
“This is a complementary bolt-on acquisition enlarging the Group's footprint in the UK's breakfast cereal market, and provides access to a strong branded proposition in this space,” it said.
The company forecast “improvement in performance in the second half of the financial year”.
This month, the Competition Tribunal approved Pioneer’s bid for full control of Heinz SA, making the company its wholly-owned subsidiary.
The company declared a gross interim dividend of 105 cents.
* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.