SOUTH AFRICA – The branded foods and beverages group, Clover Industries said it expects its headline earnings a share to increase by between 207.13% and 227.13% for the year to June, IOL reports.
Following the announcement, its share price jumped by 2.14 % to $1.36 a share, from the previous price of $1.33.
The release showed improved projections from the first trading update released at the end of June, where the group expected its headline earnings a share to increase by slightly more than 20%.
“During the current period, a mix of interventions by the management team and the normalisation of external factors enabled the company’s results to recover to expected profit levels compared with the disappointing results achieved in the comparative period,” the group said.
“Earnings a share for the current period are expected to be between 135 percent and 155% higher than earnings a share of 83.1c reported for the comparative period, resulting in expected earnings a share of between 195.40c and 212.03c.”
The interventions and factors that helped the expected earnings include the normalised weather conditions following the drought-related difficulties that significantly impacted the company’s performance compared with last year.
During the year, the company also benefited from lower input costs, aggressive fixed cost control, realisation of planned supply chain efficiencies and resultant lower costs.
Synergies were also harnessed from successful exit and transfer of the cyclical low margin drinking milk business from Clover to Dairy Farmers of South Africa (DFSA).
Clover also expected its earnings a share to show an improvement as compared with 2017 results.
Clover said the second half of the financial year was characterized by unemployment, a contraction in gross domestic product (GDP), rand volatility and ongoing price inflation, specifically higher fuel and electricity prices.
Also, the introduction of sugar taxes and the VAT increase put a significant strain on consumer spending.
Selling prices were therefore increased in April 2018 to cover inflationary cost pressures while cost management and driving efficiencies remained a clear focus to align with the consumers’ continued price sensitivity.