Pioneer Foods increased turnover by 7.8% in the four months to 31 January 2019, excluding
the contribution of the acquired Wellington’s and Lizi’s businesses. The growth is primarily
driven by price inflation in bread, wheat flour, rice and export fruit as well as sound volume
growth in local beverages, bread, rice and breakfast cereals in the UK.
Overall like-for-like volume growth is 2.0%, excluding the contribution of the acquired
businesses, implying basket inflation of 5.8%.
In the Essential Foods division, the wheaten value chain has performed well, supported by
excellent volume growth from bread as well as bread and wheat flour inflation. The maize
category posted negative volume growth and only marginal inflation year-to-date
(notwithstanding further raw material cost pressure) compared to the exceptional prior year
performance. The balance of the Essential Foods basket, with the exception of pasta,
delivered sound revenue and volume improvement over the prior year. The pasta category
remains exposed to the growing share of lower-priced imports.
In the Groceries division, the long-life fruit juice category performed well with strong volume
and value growth. The volume performance of cereals was flat compared to the previous
year, after particularly strong volume growth in the corresponding prior period. The balance
of the Groceries basket had a more challenging time with volumes flat or marginally down
over the previous year. The recovery of volumes in condiments and frozen foods is pleasing,
after the integration of the Wellington’s business into the Groceries division.
Exports into neighbouring countries experienced negative growth reflecting the anemic
economic conditions. Fruit exports however continue to perform well on stronger demand
and strengthening international dollar pricing due to lower global availability. The UK
business has done well, despite ongoing Brexit uncertainties, with acceptable volume growth
in the face of increased input cost inflation. The Nigerian business performed to expectation
with the investment in expansion capital on-track.
The positive contribution from turnover growth as stated above has however been negated
by the major cost inflation as evident in key raw material pricing and other operational input
costs. Consumer demand remains under pressure, with spending muted and not expected
to improve in the near future. As a result pressure on gross and operating margins will
continue, to the extent that price recovery lags.
The financial information contained in this trading update, has not been reviewed or reported
on by the Group´s external auditors.