South Africa's Clover H1 profit soars, sees price hikes

JOHANNESBURG: South African dairy foods maker Clover reported a sharp rise in first-half earnings on Monday as sales climbed and said it would hike prices to cushion the impact of rising costs.

Clover, whose brands include Tropika juices, said rising fuel and energy prices remained a challenge in the short term and could prompt it to raise prices for all its brands.

"We are going to have some inflationary pressures especially from fuel and electricity, we will pass this on to the consumers," Chief Executive Johann Vorster told Reuters, adding price hikes could take affect in the second half of this year.

Rising food prices are a major global concern but in South Africa a robust rand has helped to contain the threat.

Vorster said the company, which listed last year, was focused on expanding its dairy foods business and was not looking at diversification at present.

Last year Clover was seen as a potential bidder for South African wine and spirits maker KWV, which was by then an acquisition target of Pioneer Food Group.

"We are not at the moment looking at any alcohol-related products and we had not initiated anything (relating to KWV)," Vorster said.

Clover's key expansion project is the Cielo Blu project, which involves moving production facilities closer to milk sources in the coastal areas of South Africa at an estimated cost of 350 million rand ($50.8 million).

The company expects its expansion projects to take two to three years to complete.

Clover shares were flat at 10.45 rand as of 0747 GMT, compared with a 0.9 percent fall in the Johannesburg bourse's All-Share Index.

Clover said headline earnings per share for the six months to end-December soared to 73.2 cents from 0.9 cents a year earlier. Headline earnings are the main profit gauge in South Africa and exclude certain one-off items.

The company said revenue totalled 3.35 billion rand ($487 million) versus 3.02 billion rand a year earlier.

Clover said it expects to deliver a solid performance for the full year.

"The second half of the financial year is traditionally weaker than the first, but the gain in market share and continuing lower supply chain costs are expected to deliver positive results," it said.

The company said it would pay an interim dividend of 10 cents per ordinary share.