Higher margin, value-added product sales and cost efficiencies contribute to positive performance.

• Revenue up 6,0% to R9,8 billion
• Operating profit up 10,9% to R564,5 million
• Headline earnings increased by 11,7% to R356,6 million
• Headline earnings per share increased by 8,9% to 188.9 cents
• Strong cash generation of R709.7 million, from operating activities before working capital requirements
• No selling price increases on dairy products until late in the review period to protect market shares
• Inflationary costs absorbed through cost cutting initiatives, efficiencies and higher sales volumes
• Final gross cash dividend of 40,94 cps declared bringing the total dividend to 65,15 cps (FY2015: 56 cps)

Clover Industries Limited (“Clover”, “the Group” or “the Company”), a leading branded consumer goods and beverages group operating in South Africa and other selected African countries, today announced excellent financial results for the year ended 30 June 2016.

Commenting on the performance, Johann Vorster, Clover Chief Executive, said: “We are pleased with the continued strong performance, especially as this is off of a very high base set last year. We also experienced extraordinarily challenging operating and economic conditions during the period but managed to counter this by driving sales volumes, improving efficiencies and managing costs where possible.

“We navigated two very different halves of the year, the first characterised by an oversupply of raw milk and consequently lower selling prices; the second by a severe drought that swept the country and resulted in lower raw milk production compounded by higher input costs. The period saw a weakening in the foreign exchange rate which resulted in higher than expected cost inflation.

“Our strategy to balance traditional dairy products with higher margin value-added products continued to gain traction. Although our roots will always remain firmly in dairy; non-dairy and value-added products now contribute 40% to margin on material. Our short-term aim is to increase this to an even split.”

Revenue increased by 6,0% from the previous corresponding period to R9,8 billion following a 9,7% improvement in overall sales volumes. Excluding the effect of the Danone contract which was systematically phased out from December 2014, real growth in revenue was 7,5%.

Despite an 8,4% uptick in cost of sales, an increased contribution from higher margin, value-added products and improved efficiencies led to a 10,9% improvement in operating profit to R564,5 million.

The Group’s operating margins increased to 5,7% from 5,5%, whilst normalised operating margin increased from 5,2% to 5,9%.

Headline earnings rose 11,7% to R356,6 million for the reporting period, whilst headline earnings per share (HEPS) increased by 8,9% to 188,9 cents.

Clover’s brands traded in line with expectations buoyed by solid festive season demand and the heatwave conditions experienced in December 2015. The Fermented Products category, which includes yoghurt and maas, in particular contributed positively to the performance as did the Beverages portfolio which delivered an exceptional performance bolstered by the full benefit of selling price increases implemented in July 2015.

Clover kept dairy selling prices constant for most of the review period and absorbed inflationary increases as far as possible. Sales price increases were however implemented across the product categories in April 2016 to recover high cost inflation pushed up by the weakening foreign exchange rate.

Management continued its focus on cost saving drives and specifically on containing variable costs. Head office incurred no inflationary increases and administrative expenses were reduced by 2.8%, mainly due to a moratorium on new appointments as well as the cancellation of conferences and special events. The successful renegotiation of contracts, reduced selling and distribution costs by 2,6%. Marketing spend was also reduced by 13% by leveraging synergies through a “mother brand” approach.

Cash generation was strong, ending the period at R709.7 million compared to R566,7 million reported in the prior year. Investment activities consumed R332.6 million in cash.

“We successfully mitigated a range of challenges and created stakeholder value through leveraging opportunities and ensuring adaptability to market changes.

“The rate at which we were able to improve efficiencies and reduce costs this year is commendable. Senior management has further committed to a voluntary salary freeze with no increases for the current financial year in order to contain costs further,” commented Vorster.

The prolonged drought primarily in the Highveld and Kwazulu-Natal areas, has seen raw milk production ease downwards on the back of higher feed costs. Clover accordingly increased prices paid to producers in order to protect the primary industry. Current indications are that there is still a challenge to supply the forecasted market with milk. Clover is therefore monitoring the situation closely and will take the necessary action to ensure availability of raw milk.

Since listing in 2010, Clover has invested heavily in acquisitions and rejuvenating its factories and distribution assets for continual and sustainable growth. With the exception of the Bloemfontein yoghurt capacity expansion which is ongoing until July 2018, capex spend will reduce significantly as it now has the platform from which to extract further operating efficiencies, reduce costs and deliver enhanced returns to shareholders.

Commenting on prospects for the year ahead and longer term strategic objectives, Vorster said: “We anticipate that the improved weather conditions predicted for late 2016 and 2017 will normalise milk production, result in a fall in food and beverage input costs and an overall reduction in food price inflation.

“Our immediate focus will remain on fully utilising capacities and the asset base that we have built over the past five years. We are committed to increase the margin contribution from non-dairy and new products in the short term, to a level where it is equal to traditional dairy products.”

“Local opportunities for consolidation where synergies can be leveraged will remain on our radar as will opportunities to increase exports to African markets where currency risk can be mitigated. (read more here: http://www.clover.co.za/news/post_6595-clover-delivers-pleasing-full-year-results-despite-challenging-market-conditions) or visit http://www.clover.co.za/

The Supreme Flour "A Recipe for Creativity" competition is open to all bakers who are residents of South Africa. If you are a professional baker, a student baker or bake to sell, this competition is for you!

Stand a chance of winning one 20 Macadams litre industrial cake mixer worth R14 500 by sending a recipe, accompanied by a photograph, of your favourite festive season treat. The recipe needs to include one or more Supreme Flour products, such as any Supreme wheat product or Supreme prepared mix. Ensure that the Supreme Cake Flour features as a core ingredient.

All entries must be received by Tuesday, 16 December 2014 at 23:59. The recipes will then be evaluated and tested by the Supreme Flour panel of judges on Thursday, 18 December 2014 and the winner will be announced on Monday, 22 December 2014. The winner will be contacted telephonically and published on the website. 

Here’s your chance to flourish your creativity and capability. Here’s your chance to win the magnificent cake mixer. Don’t miss out on this once in a lifetime opportunity of displaying your Flour Power, that’s if you are indeed “Born to Bake.”  

Supreme has become one of South Africa's most loved and trusted wheat flour brand. Supreme offers a range of wheat flours, as well as prepared mixes, which are milled at Foodcorp's long-standing milling site in Pretoria. Supreme has been the professional bakers’ choice since 1919.

To enter the competition visit: http://www.supremeflour.co.za/competitions/?utm_campaign=festivecompetition&utm_source=TF&utm_medium=pressrelease. Competition prize queries may be directed to Foodcorp Milling Division on (012) 308 3208, from Monday to Friday, 8:30 a.m. to 5:00 p.m. until 16 December 2014.

Media contact person:
Liezel van Bergen, FC HO Marketing
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel: (011) 549 1086

Green is our favourite colour!

City Lodge is big into helping to protect the environment. ‘Sustainability’ is the buzzword around here and accordingly we’ve been busily greening our practices, like installing power-saving LED light bulbs in our hotels as well as providing dual-flushing toilet systems.

As of today we’re also launching our City Lodge Earth Day campaign, which is about promoting green practices amongst our staff and guests. It’s just one more step in trying to reduce our impact on the environment.The idea behind City Lodge Earth Day is that every day is a good day to focus on the environment.

So you will be seeing many educational and encouraging messages on our social media channels and within our hotels about ‘going green’ and how you can be part of the movement. Because the thing with green practices is that the more people you can get on board, the more beneficial they are. Together, we really can make a difference!

Small changes that together make a big differenceThere are many small changes we can each make in our daily behaviours, especially in the context of our own homes, to reduce the impact of man on the environment. But let’s take a look at just a few that you could embrace when staying at a City Lodge Hotel…

Actions that save energy include:

1. turning off lights whenever not in the room
2. making sure windows are closed when the air-con is on
3. unplugging electrical equipment when it’s not in use
4. dressing warmly in winter so that you don’t need to turn the heat up as high
5. not filling the kettle up to the top when you only need hot water for one or two cups.

Actions that save water include:

1. choosing to shower instead of bathing
2. turning off the tap while soaping your hands
3. only using the little button on the dual-flushing system when appropriate
4. always making sure all taps are properly turned off.

Other actions that help protect the environment include:

1. using environmentally friendly shampoos and soaps, like those supplied by City Lodge Hotels for our guests
2. using towels for longer than a day – this saves both water and power as fewer towels need washing.

LED lights up our world!

LED light bulbs and lamps are far more energy efficient than their incandescent or fluorescent equivalents. They are also vastly more ecologically friendly, as they contain no toxic materials and are 100% recyclable.

Knowing this, we at City Lodge Hotel Group have over the past year installed roughly 40,000 LED globes in our hotels, 26,000 of which were within hotels that are part of the City Lodge Hotel brand. In addition, over 4,000 other lights were also converted to more energy-efficient options.

Speaking about all the green changes that have been taking place in City Lodge Hotels, Chief Executive Clifford Ross says,“We remain committed to the journey which we embarked upon some years back to reduce our impact on the planet. Our journey meant that we critically evaluated all aspects of our business to positively influence our planet.”

So as you can see we’re going to be doing things a little differently around here from now on and we encourage you to do things a little differently with us!

{pp}In 2007 ManufacturingHub.co.za launched a low key industrial report assessing the South African Food, Pharmaceutical, Chemical and Cosmetic Manufacturing industries. Following on the success of this initial report ManufacturingHub.co.za will be developing an updated 2008 report.