Pioneer Foods Exits Bottling Agreement with PepsiCo, Profit Rises by 35%
Published By : 25 Nov 2014 | Published By : QYRESEARCH
The South African Food & Beverage Company, Pioneer Foods, ended its agreement for bottling the beverages of PepsiCo. Inc. in the country. The company stated that its profit increased by 35% as it recovered from a 2013 write-down of its poultry unit that it spun off.
The company, in its statement issued on November 24th, 2014, said that the net income rose to US$87 million, in the one year duration that ended on September 30th, 2014, from around US$63 million. The final dividend increased about 81% that is, to US$0.14 per share, making an increment of about 67% in total payout to US$0.2. The increment in sales is about 95%, that is, to US$1.6 billion.
Further in the statement, the company said that after it writes down its investment in the business by US$3 million, it will exit the agreement that is made with the New York based PepsiCo. to bottle its products. However, the brand portfolio of PepsiCo will continue to stay in South Africa.
Pioneer Foods wrote down the after tax value of poultry unit by US$18 million in 2013 and around US$5.1 million further, in 2014, that resulted in the spinoff of Quantum Foods Holdings Ltd. in previous month. The National Treasury estimated the lowest economic growth since 2009 recession, i.e., of 1.4% for 2014, whereas the benchmark interest rate has been increased twice by the Reserve Bank of SA, sending South African consumers under high pressure.
According to the statement, the headline earnings, excluding one-time items, saw an increment of 49% to around US$95.8 million, that is, US$0.52 per share. The company further stated that while the South African economy continues to be at risk and is not likely to recover in near future, Pioneer Foods has been re-positioned competitively to protect and grow its brands.