South African dairy manufacturer Clover Industries has witnessed a drop in annual profits on the back of a weakening currency, pressure from commodity costs and industrial action in the country.
For the full year ended 30 June, profit fell 21.2% to ZAR189m (US$17.2m). Headline earnings slid 12.8% to ZAR187.5m and operating profit decreased by 24% to ZAR282.3m.
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Despite overall sales volume declining, revenue from the sale of products increased by 8.9% to ZAR8.5bn as a result of an increase in selling prices.
Johann Vorster, Clover CEO, said it had “been an exceptionally tough second half of the financial year”.
“In the current lacklustre economy, the typical lead-and-lag effect in terms of cost recovery through selling price increases is aggravated. We took a strategic decision to increase prices gradually, to protect hard-won market share and sales volumes,” he said.
“I’m confident though that the recent downward pressure on international oil and grain prices as well as the stabilising of raw milk supply will enable us to claw back some of these costs whilst growing market share and sales volumes.”
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By GlobalData
