Rising input costs have hit the profit of Pioneer Foods — a major player in the food and beverage industries in Southern Africa, the company said on Monday.

"The year under review was characterised by significant pressure on key operating costs and volatile commodity prices in a challenging operating environment, where the consumer's discretionary income became more constrained," said Managing Director Andre Hanekom in a statement.

Pioneer Foods was releasing its results for the year ended 30 September.

"We managed to achieve good volume growth in key product categories and increased final product prices but failed to fully recover steeply rising input costs as indicated by our declining profit margin," he added.

Pioneer Foods — the company responsible for brands such as Sasko, Pepsi, Liquifruit, Ceres, Weetbix, Moirs, Heinz and Safari — said revenue increased by 27 percent to R14.9-billion.

The increase was due to increased sales for a number of its products, along with higher prices charged, which helped recover "significantly higher" input costs.

Exceptionally high raw materials

It blamed exceptionally high raw materials, fuel and energy costs and a generally depressed economy for difficult business conditions.

Headline earnings per ordinary share were down 11 percent to 292 cents.

Turning to its dealings with the Competition Commission, Pioneer Foods said in May it had received a complaint referral by the commission for alleged restrictive practices in the national bread market.

"Pioneer Foods submitted its response to the complaint referral within the set time limits. The Competition Commission opted not to respond to the answering affidavit."

The company said independent legal advice indicated it had reasonable prospects of a successful defence against all the charges in the complaint referral.

This referral was in addition to the one received in the previous financial year for alleged restrictive practices in Western Cape bakeries.

"Independent legal advice in that case also indicated a reasonable chance of a successful defence against all or some of the charges in that complaint referral," the company said.

Accordingly, no provision was made in the year under review for the payment of any penalties.

Sapa

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