Clover’s operating profit lower due to higher costs

Dairy processor Clover’s revenue increased by 10,8% for the six months ended 31 December 2012, compared to the same period the previous year, to R3,98 billion rand.

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Clover however said higher than normal marketing and promotional costs impacted on its margins. It reported that sharp increases in fuel and other input costs, as well as strikes resulted in lower earnings for the period. Operating profit decreased by 22,4% to R145,6 million from the R187,7 million in the first half of 2012. Headline earnings declined by 33,5% to R72,9 million from R109,6 million in the first half.

Headline earnings per share dropped to 40,7 cents in the second half of 2012 compared to the 61,2 cents per share in the first. Clover declared an interim dividend of 10 cents per ordinary share. “The first half of the year saw Clover make extensive investments in new products and technologies that will further entrench the Group’s products and help grow market share for many years to come. In the shorter term, we are confident that the operational factors that negatively impacted earnings will be addressed effectively,” said Johann Vorster, Clover CEO.

Commenting on farm gate milk prices, Vorster said: “We are well aware of the pressures faced by farmers, especially in light of higher minimum wages and fuel price increases. We will continue to carefully monitor the situation and increase farm gate prices where necessary to secure a sustainable supply of raw milk.”

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