Johannesburg - Pioneer Food Group, the nation’s second-largest food producer, said it will look to curtail costs as it sees the South African environment “remaining difficult” amid high corn prices and a weak rand.
Profit rose 6.8 percent to R887.3 million ($57 million) in the six months ended March 31 from a year earlier, while revenue increased 5.9 percent to R10 billion, the Paarl, Western Cape province-based company said in a statement on Monday.
Read: Drought weighs on Pioneer
The dividend climbed 11 percent to R1.05 a share.
Pioneer, whose brands include ProNutro cereal, Sasko bread and Ceres juices, operates mainly in South Africa, whose currency was the worst performer against the dollar in the six-month period under review, losing 6.2 percent. The country’s worst drought in more than a century has cut production of raw materials including wheat, while local corn prices surged to a record in January.
“Significant raw-material price inflation, as a result of the drought and the rand’s weakness, saw a decline in corn volumes,” it said. “The external environment is likely to remain difficult for the near future. There is sufficient scope to enhance efficiencies and curtail costs across the value chain.”
The stock fell 2.1 percent to R158.09 on May 20 in Johannesburg, giving the company a market share of R36.7 billion. Tiger Brands is the nation’s biggest food producer, with a market value of R65 billion.
BLOOMBERG