JOHANNESBURG (Reuters) - Clover Industries’ normalised annual profit more than tripled, the South African dairy company said on Wednesday, boosted by its exit from the milk business and a recovery from drought the previous year.
Clover, which processes products including yoghurt, beverages, cheese and olive oil, has focused on developing higher margin, value-added branded food and beverages as part of its strategy to move away from lower-margin commoditised dairy products.
Normalised headline earnings per share (HEPS) rose to 206.9 cents for the year to June 30 from 63.9 cents.
Headline earnings - South Africa’s most widely watched profit gauge - strips out certain one-off items.
Clover’s HEPS strips out a 439 million rand ($29 million) impairment relating to a revolving credit loan given to the Dairy Farmers of South Africa (DFSA).
Clover, which holds a 26 percent voting right in DFSA, would swing into a full-year loss with a diluted headline loss of 22.9 cents per share for the period compared with 63.9 cents in the year-ago period if the impairment was included.
By 1128 GMT shares in Clover fell 3.96 percent to 14.30 rand after rising more than 2 percent in early trade, with traders saying the impairment had dented sentiment on the stock.
“This is the one thing that is worrying the market. But from a normalised point of view management have delivered and are moving in the right direction,” said portfolio manager at Cratos Wealth Ron Klipin.
The previous financial year profits were affected by a severe drought.
“Clover reported an exceptional turnaround from a drought-stricken prior year to deliver its best financial performance since listing,” said the firm, which listed in 2010.
Clover said it had lost 6.5 million rand a month in fees after processed meats were recalled by health authorities after South Africa suffered the world’s biggest outbreak of listeria last year that killed more than 200 people..
“The listeria outbreak resulted in losses in principal fee income which could not be replaced during the reporting period,” Clover said. However, Clover added that it recovered some of the losses through fees earned on services such as production, sales and merchandising and distribution for a competitor.
Clover declared a final dividend of 48 cents, bringing its total dividend to 75 cents for its financial year compared with 26 cents in the prior year.
($1 = 15.0855 rand)
Editing by James Macharia; Editing by Ken Ferris