The earnings of Pioneer Foods [JSE:PFG] fell 15% amid a "difficult" trading environment characterised by rising maize prices and weak demand from consumers in the general food and beverage sectors.
The owner of brands such as Weetbix, Pronutro, and Sasko on Monday released its financial results for the year ended September 30, 2019.
Group earnings fell 15% to R910m, while headline earnings per share declined 6% to 511c. Its total dividend for the year was 11% lower than the previous year, at 324c.
"The major business challenge during this period was the lagging recovery of the significant input inflation in sales pricing, which was, with the exception of the maize and Wellington's categories, effectively addressed," the report read.
Excluding its maize products and Wellingtons, the operating profit of the group would have improved by 6.3%. However, it decreased 13.1% to R1.4bn.
The group's net loss, after income tax, amounted to R61m, greater than the R55.2m reported in 2018. "This loss in the current year relates for the most part to impairment charges on certain assets and trademarks, while the profit of the previous year relates to profit on the sale of assets and shares," the report read.
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"The Wellingtons business is showing signs of improvement, albeit off a low performance base, with the condiments portfolio in particular recording a good recovery," the group said. Pioneer Foods acquired Heinz Foods in 2018, which became part of Wellingtons operations.
The group said export volumes to the rest of Africa were negatively impacted by volatile currencies and constrained consumer markets. "Trade barriers also impeded progress as foreign governments adopted a protectionist approach towards local manufacturing in order to mitigate the consequences of the constrained macro-economic backdrop."
"The export of long life fruit juice and related groceries products into Zimbabwe in particular was hampered by the challenging and demanding economic conditions in that country."
Its dried fruit exports also took a knock from high US stock levels from the previous season and a bumper harvest of vine fruit in Turkey.
Pioneer Foods gave a brief update on its merger with PepsiCo, which was approved by its shareholders in October.
The transaction is still subject to regulator approval. The result from the Competition Commission, and the Competition Tribunal is expected next year.
If the merger is approved, the group structure will change, including a delisting from the JSE.
By 12:43 on Monday shares in the food and beverages group were trading 0.11% weaker at R108.88 on the JSE.