Clover expects headline earnings per share for the six months ended 31 December 2012 to be between 29 percent and 34 percent lower as “isolated” industrial action hit the company during the period, it said on Friday morning.
Clover is a JSE-listed dairy group and has the largest chilled distribution network in South Africa. It said earnings per share for the period are expected to be between 19 percent and 24 percent lower. But revenue increased by 11 percent.
“This growth achieved was not sufficient to compensate for the additional costs (marketing, sales and other fixed costs) incurred in relation to the launch of new products and platforms across the business,” it said in a statement.
“These investments include some major market innovations that will serve Clover well into the future (Prisma Pack for UHT milk and Tropika, Tetra top for Danao, as well as 30 days Ultra Pasteurised milk and 18 days Extended Shelf life fresh milk).”
Clover results were further impacted by substantial fuel price increases and the under supply of UHT milk to the market as a result of complications experienced during the conversion of existing UHT equipment for the new Prisma pack, and the importation of UHT milk to facilitate the Prisma conversion.
Notwithstanding, Clover continued to achieve market share and volume growth in most of its key product categories. Project Cielo Blu remains on track and the company is in the process of implementing planned price increases to the trade.
Clover has also secured two new principals during the period, which will further enable a reduction in its supply chain costs. The principals are Enterprise Foods (with effect from 1 June 2013) and Red Bull’s top end sales and merchandising services from 1 March 2013. Clover is of the view that the factors leading to the weaker earnings during this period do not negatively affect the strategic direction or value proposition of the company.
It expects to release its interim results for the six months ended 31 December 2012 on or about 12 March 2013 and a further update may be provided closer to the time if deemed necessary.