The share closed 4.11percent higher on the JSE yesterday at R18.51.
The revised trading update for the year to end June, which was released yesterday, came after an update in June, when it expected its Heps to increase by slightly more than 20percent.
“During the current period, a mix of interventions by the management team and the normalisation of external factors enabled the company’s results to recover to expected profit levels compared to the disappointing results achieved in the comparative period,” the group said.
Clover said Heps is expected to be between 196.26cents and 209.04c a share, improving on last year’s earnings of 63.90c.
The interventions and factors that helped the expected earnings included the normalised weather conditions following the drought-related difficulties that significantly impacted the company’s performance compared with last year.
These included lower input costs, aggressive fixed-cost control, realisation of planned supply chain efficiencies and resultant lower costs, as well as the successful exit and transfer of the cyclical low margin drinking milk business from Clover to Dairy Farmers of South Africa, to name a few.
Clover also expects its earnings per share (Eps) to show an improvement compared with the 2017 results.
“Eps for the current period are expected to be between 135 and 155percent higher than Eps of 83.1c reported for the comparative period, resulting in an expected Eps of between 195.40c and 212.03c,” the group added.
The group stated that the macro environment during the second half of the financial year was in some instances tougher than the first half and characterised by a rise in unemployment, a contraction in gross domestic product, rand volatility and ongoing price inflation, specifically higher fuel and electricity prices.
“In addition, the introduction of sugar taxes and the value-added tax increase put a significant strain on consumer spending,” the group said.
The company said it had decided to increase selling prices only moderately and to implement them late in the financial year in order to gain back lost market shares from the previous year.
“Selling prices were, therefore, increased in April 2018 to cover inflationary cost pressures. However, cost management and driving efficiencies remained a clear focus to align with the consumers’ continued price sensitivity,” Clover said. It added that while it was pleasing to see profitability levels returning to expected levels, the challenging macro-economic and trading conditions since the beginning of the year were expected to continue.
“Against this backdrop, Clover has secured strategic trading partnerships and is confident that it can provide cost- and value-effective solutions to alleviate the pressure faced by consumers,” the group said.
Clover will release its annual results on or about September 12.