Pioneer Foods CEO Phil Roux. Picture: SUPPLIED
Pioneer Foods CEO Phil Roux. Picture: SUPPLIED

Pioneer Foods Group anticipates that its 2017 financial year to be a tale of two halves, with high input costs expected to cut into first-half profit before relenting in the second half. The food producer, which includes well-known brands such as White Star, is still reeling from the effects of the 2016 drought that pushed up grain prices, which was compounded by a weaker rand.

In its operational update on Friday, the medium-sized company by market value expects raw material costs to subside, thanks to a maize harvest that is expected to be materially higher in 2017 than 2016. Turnover in the four months to January was up 5.1%, bolstered mainly by businesses in its home market. International turnover declined 10.3%.

The raisin crop shortfall, higher juice concentrate costs, volatile currencies and weak consumer demand in Africa continent hurt the international business. "The 2017 raisin crop looks reasonable, which may bolster the second half performance," the company said.

The groceries division was affected by lower volumes as a result of softer trading conditions, increased competition and significant cost push inflation. The stock was up 0.91% to R167.01 in mid-morning trade on the JSE, giving the company a market value of R38.9bn.

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