Adequate funding in place to roll-out Project Cielo Blu and lift margins over the medium-term

14 March 2011 – Clover, a leading branded consumer goods and beverages group operating in South Africa and other selected African countries, today announced a solid set of interim financial results for the period ended 31 December 2010; its first since successfully listing on the JSE Limited in December 2010.

Revenue increased 10.8% from R3,023 billion to R3,349 billion while operating profit was up 43% to R176 million from R123,1 million in the comparable period. Headline earnings from continuing operations increased 693% to R94m. When excluding certain above average restructuring costs in the previous year, this figures still grows by a healthy 105%. A dividend of 10 cents per ordinary shares has been declared.

Johann Vorster, Clover’s Chief Executive Officer, said: “The impact of our various initiatives to save costs and improve efficiencies across the Group, combined with lower input costs and market share gains, have resulted in a solid financial performance during the period.”

Despite a modest GDP growth in South Africa during the six months to 31 December 2010, relatively low interest rates had a positive effect on overall consumer spending and resulted in Clover sharing in the economic recovery across all of its chosen market segments with the exception of cheese. Market share was gained by passing savings on to consumers.

Vorster elaborates “Operationally, we continue to gain market share from our competitors, especially in our beverage business which showed solid volume growth of 12,4%. Benefits unlocked through increased efficiencies across our supply chain were passed on to customers as part of Project Reset, which is aimed at ensuring an appropriate price premium for Clover’s products relative to its competitors.

“Clover remains the largest distributor of chilled goods in South Africa with regular distribution to approximately 14 000 delivery points. We have more than 600 trucks who deliver on average to eight customers per day per truck.”

R575 million of capital was raised from flagship South African institutional investors during the listing process. The capital is being deployed to support Clover’s capacity expansion projects and the redesign of its supply chain. 

Vorster explained that this project, dubbed Cielo Blu, will see the move of the long life products plant from Midrand to Port Elizabeth and Pinetown, closer to milk production sources. The central Johannesburg beverages factory will be integrated into the Midrand facility along with expansions at several other  distribution sites. Project Cielo Blu will take between 24 and 36 months to complete and the expected gain in efficiencies through these moves will result in margins gains.

“Looking ahead, whilst the extent of the economic recovery remains unclear and the cyclicality inherent to our business results in a typically weaker second half, we expect to deliver a positive performance for the full year,” concluded Vorster.