Pioneer said its headline earnings crashed to R509.1million from R620.3m last year on the back of higher operating costs.
The news sent shock waves to other big food companies on the JSE, with Tiger Brands shedding 3.8percent of its share value, while AVI lost 2.68percent.
Chief executive Tertius Carstens said factors such as fuel price increases and maize shortages had a negative impact on the results during the period.
“Increased operating costs were driven by the considered investment in future growth capabilities as well as the higher cost of fuel, impacting distribution and energy related cost elements,” Carstens said. “Other factors include our acquisition of the Wellington business, which also added to the human resources costs.”
Pioneer Foods shares closed 11.03 percent lower on the JSE at R73.90.
Tiger Brands shares closed 3.95 percent lower at R237.98 and AVI shares were down 3.05percent to R89.68.
Carstens said volatile maize prices also added to the company’s woes.
“The year-on-year regression in the performance of the maize category, off the strong comparative period base, was more than expected, given sustained selling price deflation despite raw material cost inflation and a weaker milling performance,” the group said. Pioneer, however, posted an 11.5percent revenue growth to R11.04 billion, with volumes up by 2.7 percent.
The group said revenue expansion was driven by sound volume growth in key product categories such as bread, wheat, rice, beverages, cereals in the UK and sausage rolls in Nigeria.
It said its total basket inflation rose to 6.6 percent - ahead of overall consumer price inflation in the country - fuelled by price inflation in the essential foods, international fruit and some smaller groceries product categories.
Pioneer produces brands such as Sasko, White Star, Weet-Bix, Ceres and Spekko rice, and operates three divisions: essential foods, groceries and international business.
The group also reported an 18percent decline in earnings per share to 272.3cents a share and a 14percent decline in headline earnings per share to 272.4c.
It maintained its interim dividend of 105c a share.
Carstens said the volumes growth represented a credible top line performance in the significantly constrained local consumer market with consequent competitive pressures.
He said Pioneer will continue to be impacted by pressure on consumer demand with resulting muted spending
“The group will continue efforts to optimise costs and efficiencies while ensuring its brands remain available and relevant to customers and consumers,” the group said.