| Tue 13 Mar 2012, 7:16 | | CLR/CLRP - Clover Industries Limited - Clover produces solid interim results |
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CLR CLRP
CLR
CLR/CLRP - Clover Industries Limited - Clover produces solid interim results
despite challenging market conditions; benefits of Cielo Blu starting yield
results
CLOVER INDUSTRIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/030429/06)
JSE Ordinary share code: CLR ISIN: ZAE000152377
JSE Preference share code: CLRP ISIN: ZAE000152385
CLOVER PRODUCES SOLID INTERIM RESULTS DESPITE CHALLENGING MARKET CONDITIONS;
BENEFITS OF CIELO BLU STARTING YIELD RESULTS
- Revenue increased by 7,2% to R3,6 billion
- Operating profit increased by 6,8% to R187,7 million
- Headline earnings per share increased by 16,6% to R109,6 million
- Interim dividend of 15 cents per share declared
13 March 2012 - Clover, a leading branded consumer goods and beverages group
operating in South Africa and other selected African countries, today
announced solid interim financial results for the six months ended 31
December 2011.
Revenue increased by 7,2% from R3,3 billion to R3,6 billion, mainly as a
result of higher income from services rendered to principals, improved
product mix and higher volumes, rather than selling price increases. As a
result, operating profit was up 6,8% to R187,7 million from R176 million in
the previous reporting period and Clover`s gross margin for the period
improved from 26,8% to 27,6%.
Higher input costs, especially in juice concentrates and ingredients, were
largely offset by initial benefits derived from internal efficiencies. This
included increased factory throughput and additional UHT manufacturing
capability in Port Elizabeth, which resulted in lower raw milk transportation
costs.
Headline earnings increased 16,6% to R109,6 million. Headline earnings per
share however decreased by 16,4% to 61,2 cents as a result of shares issued
at time of listing on the JSE. Clover declared an interim dividend of 15
cents per ordinary share, payable to shareholders 10 April 2012.
Johann Vorster, Clover`s Chief Executive Officer, said: "We are satisfied
with this solid performance. Clover managed to grow its profitability and
market share despite difficult trading conditions and sharp increases in
input costs. The implementation of Project Cielo Blu remains on track and has
started to yield results as planned, with improved efficiencies and savings.
This will of course increase as we get closer to completion over the next 24
months."
The Project Cielo Blu capacity expansion at the Clayville distribution centre
contributed significantly to the 18,7% growth in principal business revenue.
The first quarter of the financial year was characterised by increased input
costs and subdued consumer spending, especially following the wide spread
industrial actions during mid-2011 in South Africa. The second quarter
yielded an improved trading environment, despite continued increases in input
costs. Although Clover was unable to recover higher input costs due to the
high milk flow season, it managed to offset a substantial part of these
through higher sales volumes, especially in branded and non-bulk products.
On farm milk production input costs rose dramatically during the winter of
2011, negatively impacting supply, despite Clover paying the full supply
premium to producers during August and September to help mitigate against
rising feed costs. Sales volumes and revenue were as a result impacted as
milk intake was below market demand during the first quarter. From October to
December 2011, sufficient milk was collected to supply the market but the
normal seasonal stock build-up in anticipation of the 2012 autumn and winter
was below required levels. This, and the planned move of production equipment
to Port Elizabeth as part of Project Cielo Blu during the winter of 2012,
will necessitate the import of milk powder, butter and UHT to ensure full
supply during the relocation process.
Farmgate milk prices were increased after the review period by an average 60
cents per litre or approximately 20% from January 2012 to March 2012. This is
deemed sufficient to alleviate immediate input cost pressures on Clover`s
producers and will be recovered in the market.
Vorster comments "We are strongly resisting cost pressures, and where these
cannot be absorbed, it will be passed onto the market. A temporary impact on
the healthy volume growth we have experienced over the last number of years
is to be expected, but our brands are resilient and we do not foresee volume
growth prospects affected over the medium and longer term.
The phased implementation of Cielo Blu continues to gain momentum with
efficiencies in warehousing capabilities already evident. We are confident
that the planned supply chain optimisation will yield the expected savings
and therefore the successful implementation of Cielo Blu remains our first
priority.
Although the economy remains sluggish, we believe that the encouraging trend
of the second quarter will continue and that we`ll be able to recover cost
increases during the second half of the year. Everything considered, Clover
remains well positioned to produce solid results in the second half of the
year."
ENDS
ENQUIRIES
Clover Industries Limited +27 (0) 11 471 1702
Johann Vorster - Chief +27 (0) 82 462 0083
Executive
Jacques Botha - Chief Financial +27 (0) 83 283 4035
Officer
College Hill +27 (0) 11 447 3030
Morne Reinders +27 (0) 82 815 1844
Frederic Cornet +27 (0) 83 307 8286
Any forward looking statement included in this announcement has not been
reviewed and reported on by Clover`s external auditors and does not
constitute an earnings forecast. The unaudited interim condensed consolidated
interim results for the six months ended 31 December 2011 and an analyst and
investor presentation by management, will be available on the Company`s
website this morning.
NOTES TO EDITORS
OVERVIEW
Operating in one form or another since 1898, Clover has enjoyed a long and
successful history as part of the development of South Africa`s dairy and
Fast Moving Consumer Goods industry. Today, Clover is a leading and
competitive branded consumer goods and products group operating in South
Africa and other selected African countries with core competencies in:
- The production of dairy and non-dairy consumer products
- The distribution of chilled and ambient consumer products
- The sales and merchandising of fast moving consumer goods
Clover produces and distributes (for itself and other FMCG companies) a
diverse range of dairy and non-dairy consumer products to consumers and
customers though one of the largest and most extensive distribution networks
in South Africa. The business platform, created and sustained by the dairy
business, provides the perfect platform for the Group to reach an extensive
cross section of South African customers and consumers. Clover`s business
platform spans the breadth of the value chain from production to sales and
integrates key value-added support services such as logistics, supply chain
management, sales and merchandising. Clover`s market penetration (Clover
delivers to approximately 14,000 delivery points across South Africa) coupled
with its value-added services offering and high frequency of delivery,
positions Clover to exploit attractive opportunities for organic and
acquisitive growth.
Clover was converted from a co-operative society into a public company in
2003. Subsequent to the conversion, Clover has evolved into a dynamic demand-
driven branded consumer products business with attractive growth prospects.
As part of its evolutionary process, Clover implemented a capital
restructuring on 31 May 2010 which was a milestone in Clover`s corporate
development and resulted in both economic benefits and voting control vesting
in the ordinary shares. In addition, the delinking of the ordinary shares
from the delivery agreements enabled persons other than dairy producers to
acquire ordinary shares, facilitating Clover`s ability to raise equity
capital. Capital scarcity has historically been a key constraint for Clover`s
growth and development.
CORPORATE STRATEGY
Clover`s corporate strategy is to build onto existing competencies within the
Group and to establish a culture of exceptional performance with a view to
creating a platform for future market expansion.
Key to all of Clover`s activities is the expansion of capacities to share in
the strong growth in consumption in the product segments in which it has a
leading market share.
Clover has identified a unique set of strategic pillars on which the success
of the business is founded. These strategic pillars are managed and measured
by the company across all business activities by means of a Balanced Score
Card.
The strategic pillars are:
- To optimise the brand portfolio
- To simplify and reduce costs in the supply chain by changing the
operational model to fit with the business model
- To increase market share through sales and distribution by leveraging
off Clover`s strong distribution capabilities (Clover`s aim is to
constantly redesign service offerings to customers and Principals in
order to increase sales volumes and profitability of the route to
market)
- To actively support the business in the most effective and efficient
manner
- To constantly adapt Clover`s Human Resources capabilities in order to
fit its business model
- To successfully complete value-enhancing capital projects through proper
planning, project management and the tracking of the business case
benefits and
- to actively seek value-enhancing corporate activity
COMPETITIVE STRENGTHS
Clover is a market leader in the production, distribution, sales and
merchandising of branded consumer goods. Clover`s leading market position is
a result of its ability to leverage its core competencies across its product
portfolio sustained by:
1. An iconic South African consumer brand with market recognition and
pricing power
2. Exposure to an attractive industry with favourable fundamentals
3. Access to one of the largest chilled and ambient distribution networks
in South Africa
4. Value-enhancing optimisation and expansion projects (Project Cielo Blu)
5. Strong and unique relationships with its milk producers
6. Attractive growth opportunities
7. Dynamic management team with significant experience in the dairy and
FMCG business
BRANDS
CLOVER BRANDED CLOVER DUAL-BRANDED STAND-ALONE NON-CLOVER
PRODUCTS PRODUCTS ENDORSED PRODUCTS BRANDING
Milk Milk Beverages Milk
Fresh milk Clover Mmmilk Aquartz Creamline UHT
UHT Milk Clover Great Taste Capri-Sun
Steri Milk No Fat Tropika Cheese
Clover The One Manhattan Elite
Cheese Ultramel UHT Super M Sacca
VP Cheese Danao
Processed cheese Beverages Other
slices Clover Krush Butters Elite Skim Milk
Feta Clover Life Erica Powder
Mozzarella Tulip
Butter and spreads
Beverages Clover Butro butter Cheese
Nectar (KZN) spread Berg
Clover Mooirivier
Other butter Other
Cream Clover Springbok Cream cup
Condensed Milk butter Kremel
Ghee Clover Farmstyle Surromel
Whey
Whey concentrate Cheese
Full Cream Milk Clover Tussers
Powder
Rolled Dry powders
Buttermilk powder
8g Butter
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 13/03/2012 07:16:01 Produced by the JSE SENS Department.
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