Clover lowers earnings outlook, on effects of drought and rand
Clover says headline earnings per share for the year to June are expected to be 50% to 65% down from 2016 as "stagnant and falling" selling prices and rising input costs are forcing it to make difficult decisions about long-term growth. The "new normal" constrained economy has "heavily affected" its latest financial results at a time the group is restructuring to derive more profits from value-added products such as custards, yoghurts and infant foods. "Clover has experienced similar margin pressures to many of the other South African food producers, but it looks as though this is most concentrated in its beverages and milk divisions," Dirk van Vlaanderen, associate portfolio manager at Kagiso Asset Management, said on Thursday. "There was a large increase in farm-gate milk prices that Clover was not able to pass on fully to consumers and therefore profits were squeezed," he said. Clover said it had contended with "many complex challenges" in the year, including the effects of prolo...
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