Nompumelelo Magwaza

It was not yet time to celebrate, despite the delivery of a good interim result from Pioneer Foods, chief executive Phil Roux said yesterday.

“It is like being in a changing room at half time with sweat dripping off and you are ahead of your expectations but it’s not yet time to lift the cup.”

Pioneer Foods, which owns brands such as White Star super maize meal, Ceres and Weetbix, increased revenue from continuing operations by 9 percent year on year to R8.8 billion for the six months to March.

Volume growth was muted at 0.4 percent, which Roux said was a cause for concern.

Operating profit from continuing operations increased 43 percent to R855 million, delivering an operating profit margin of 9.7 percent compared with 7.4 percent last year.

Adjusted headline earnings from continuing operations increased 44 percent to R595m.

Growth in revenue was attributed to increased selling prices and exports, and the sales mix. Other key drivers underpinning the performance included good growth in beverage volumes and the turnaround at Quantum Foods.

“There is still a lot of hard work to be done in the coming five months but a very good first-half score,” Roux said.

Pioneer Foods is unbundling Quantum Foods and has started selling off some of the units. Roux said Quantum Foods was still a profitable business.

“Quantum Foods did well with about R58m in profit and this was achieved as a result of the closure of abattoirs, the consolidation of some facilities, exiting some of the unprofitable markets and significant costs cuts.”

Operating profit excluding Quantum Foods was up 43 percent but including Quantum operating profit rose 60 percent, he said.

The beverage business benefited from the summer season.

Roux said: “Domestically we did very well… and did not take any further price increases through the season. We got significant profit leverage because our costs were well managed.”

In addition, growth in export volumes of beverages “was stronger than the South African growth rate at 8 percent”.

With South Africa sitting on low maize stockpiles, Roux said it had been difficult to find a balance between price, margins and volumes.

“The other issue was that our market share was completely overheated and we would rather have somewhat lower market share and make decent margins.”

In the past six months, there was a rise in the commodity cycle but prices did not increase enough to recover costs, so volume was up 12 percent “but we made really little money”.

Shares in Pioneer Foods advanced 1.04 percent to close at R97 on the JSE yesterday.