SOUTH AFRICA – Clover Industries Limited, South Africa’s leading dairy-based foods and beverages manufacturer, says it will return to profits in the year ending June 2019 after posting after tax loss in the previous year.
Clover posted a loss in the prior year after the company wrote off a loan to its then recently unbundled subsidiary, Dairy Farmers of SA – making its first annual loss in more than a decade.
According to a report by Business Day, clover said it projects headline earnings per share (HEPS) for the year to end-June to be more than 180.5c higher than the headline loss per share of 23.1c previously.
The dairy giant said that trading conditions in the retail and fast-moving consumer goods sectors had worsened in the months leading up to country’s elections.
“Despite this, Clover continued to increase its market shares in various categories on the back of marketing investment and additional trade support. This will bode well for future performance,” it said.
The company, which launched spreads and margarines in March, said the products “were well received by the trade” although price increases have been delayed.
Clover also noted that a fire incidence was reported in its Estcourt powder factory in March which subsequently had a significant impact on the availability of cream as it could not produce skimmed milk powder.
“This has, in turn, impacted production of certain highly profitable products”. However, the company said it was insured for the damaged assets and lost profits.
Clover said income from services ‘has come under pressure’ due to lower volumes at one of its principals and the loss of a distribution contract.
While a new principal had signed up, it noted that efficiencies and the full financial impact of the contract” will only be realised in the next financial year.
The group had also signed a new five-year agreement with Danone Southern Africa to provide warehousing and distribution services from July at a deal worth more than US$28.25 million (R400m).
The Johannesburg Stock Exchange listed firm said it is set to increase its markets share in various categories on the back of marketing investments and additional trade support, boding well for its future performance.