food manufacturers
Pioneer falling behind
It’s been a year of hell for Pioneer Food Group due to the devastating drought, and the market has taken fright
“Buy when others are fearful.” This advice from master investor Warren Buffett appears particularly appropriate to Pioneer Food Group. The market took fright following the release of Pioneer’s trading update for the six months to March. Warning of a 38%-58% headline EPS slump sent the R21bn annual revenue food group’s share price diving 10% within five days of the release. It was not that CEO Phil Roux had left the market in the dark. “It’s been a year out of hell,” he told Financial Mail in December. This was due to the devastating drought, which sent food commodity prices soaring. Essential foods such as maize meal and bread are a major factor in Pioneer’s performance, accounting for some 60% of its revenue and operating profit in a normal year. Maize, where a 1.2Mt production shortfall was predicted, posed a problem. Pioneer had no option but to buy maize forward. Then came the rain, sending the maize price into free fall. But it will bring no benefit to Pioneer until futures con...
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