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SOV
SOV
SOV - Sovereign Food Investments Limited - Trading Statement
SOVEREIGN FOOD INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
Registration Number 1995/003990/06
JSE Code: SOV & ISIN Number: ZAE000009221
("Sovereign" or "the Group")
TRADING STATEMENT
In accordance with paragraph 3.4(b) of the Listings Requirements of the JSE
Limited, shareholders are advised that headline earnings per share and earnings
per share for the six months ended 31 August 2008 are expected to be between
160% and 180% lower than the comparative figure for the six months ended 31
August 2007.
This decrease in headline earnings can be attributed to lower than expected
poultry prices and higher than expected feed prices.
Volumes will be 40% higher than the same period last year.
The Group is successfully implementing its planned expansion program and this
can be seen in the increased volumes over the same period last year. The Group
is confident that it will reach its target of a 60% increase in volumes for the
full year to 28 February 2009.
Poultry prices are expected to be 5% lower than the same period last year.
Poultry prices during the first 3 months of the year were lower than expected
due to reduced consumer spending which resulted in higher national stock levels.
However, poultry prices for the months of June and July 2008 are higher than or
equal to the poultry prices in June and July 2007. There has been a strong
increase in consumer demand in the second quarter of the financial year and it
is expected that this stronger consumer demand will continue through the second
half of the financial year.
The Group is confident that poultry prices will continue to increase on the back
of significantly reduced imports and also higher red meat prices as higher feed
costs continue to force red meat, pork and poultry producers to pass on these
higher feed costs to consumers.
Feed prices are expected to be 50% higher than the same period last year.
Maize and soya, which make up 90% of the volume of poultry feed, have increased
in cost by 50% over the same period last year.
The Group has hedged maize forward to February 2009 and it is therefore expected
that further increases in the cost of maize will be considerably mitigated. The
recent decrease in the international price of maize and the good local crop will
also contribute to a lower average maize price in the second half of the
financial year.
It is expected that feed costs for the full year will be 25% higher than for
the previous year.
Shareholders are advised that this decrease does not give an indication of
earnings for the full year to 28 February 2009. Traditionally trading results in
the second half of the financial year are better than trading results in the
first half of the year.
The forecast financial information on which this trading statement is based has
not been reviewed and/or reported on by the Company`s auditors.
The results for the six months ending 31 August 2008 are expected to be released
on or about 25 September 2008.
29 July 2008
SPONSOR: BARNARD JACOBS MELLET CORPORATE FINANCE (PROPRIETARY) LIMITED
Date: 29/07/2008 12:53:01 Produced by the JSE SENS Department.
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