Categories: South Africa

Clover surprises, but cautions about second half

Clover posted a positive set of financial results, which saw revenue up 10,4% to R4,32 billion and operating profit up 70% to R235,1million for the six months to 31 December 2013.

Headline earnings per share for the half-year were 90% higher than for the same period last year.

However, this performance would be difficult to repeat in the second half of the year, given rampant inflationary pressures, which affected input costs and consumers, said Clover CEO Johann Vorster.

The jump in revenue in a challenging operating environment was mainly a result of selling price increases of on average 8,8%. Clover increased its average price paid to producers by 5,3% from 1 February 2014 and by a further 8,9% from 1 March. The selling price increases and inflationary pressures on the consumer affected volume growth, with overall sales volumes growing by 1,2%.

Dairy fluids volumes grew by 1,5%, supported by strong maas sales volumes. UHT volumes increased by 4,7%, while fresh milk volumes declined by 6,6%, driven by aggressive UHT pricing from retailer house brands.

36ONE asset management analyst Jean-Pierre Verster said while Clover’s headline numbers looked very strong, it was coming off the weak base of the previous year.

“It’s a reasonable set of results, but the full year results won’t show the same growth percentage. Clover needs to look for new products and needs to look at price increases carefully. The input cost increases that both farmers and Clover are experiencing makes for a very difficult situation. It puts them under a lot of pressure,” said Verster.

In March, Clover formed a joint venture with Futurelife, to launch a new range of functional foods, including an instant meal product that would be mixed with milk. “They will probably look for more products to add to their distribution footprint,” said Verster.

Published by
Caxton Magazines

Recent Posts

  • Caxton
  • South Africa
  • Use only text

New on-site medical care for Grabouw fruit company workers

Two-a-Day, a fruit growing, packing and marketing company in Grabouw, recently launched a wellness programme and day clinic for its…

16 hours ago
  • By Invitation
  • Featured Home Image

‘Green’ livestock production: the facts and the fictions

Global livestock production is increasingly under attack from certain societal groupings who claim that the sector is causing unnecessary environmental…

20 hours ago
  • South Africa

Additional vehicles to combat crime in the Free State welcomed

Free State Agriculture (FSA) has welcomed the deployment of 48 additional vehicles made available by the South African Police Service…

2 days ago
  • Farming for Tomorrow
  • Featured Home Image

Designing an irrigation system according to soil type

Dr Willem de Clercq, a researcher at the Water Institute at Stellenbosch University, says that all farmers, and especially those…

2 days ago
  • Caxton
  • Use only text
  • World

Major losses for Canadian agri sector due to labour shortages

It is estimated that the Canadian agriculture sector suffered C$2,9 billion (about R30 billion) in lost sales in 2018, due…

2 days ago
  • Aquaculture

How to distinguish similar-looking juvenile cichlids

Approximately 15 cichlid species occur in South Africa. To the untrained eye, several appear confusingly alike, especially as juveniles. So…

3 days ago