JOHANNESBURG, May 22 (Reuters) - South Africa’s Pioneer Food Group expects a stronger profit in the second half of its financial year on lower maize prices after reporting a 47 percent drop in earnings in the half year to March on Monday.
Pioneer’s headline earnings per share fell to 253.4 cents for the six months to March 31 from 479.3 cents a year ago as higher maize prices following a severe drought raised costs for its essential foods and grocery divisions.
Pioneer said in a statement lower maize input costs from June, lower beverage input costs and increased raisin supply would buoy its second-half performance.
“The first half impact, which was severe, cannot be recovered in the second half. We do expect however an improvement versus the prior year in the second half in groceries and our food essentials business,” Chief Executive Phil Roux said in a results presentation.
“The drought of 2016 led to a local shortage of maize and consequently higher raw material prices,” acting Chief Financial Officer Cas Lamprecht said.
South Africa expects to reap its largest harvest since 1981, the Crop Estimates Committee has forecast.
The bumper crop has eased maize prices with the staple white contract ending July up 1 percent at 1,810 rand a tonne by 1043 GMT on Monday. The July contract scaled record peaks over 5,000 rand a tonne 16 months ago due to drought.
By 1105 GMT shares in Pioneer were down 2.79 percent to 156.69 rand. (Reporting by Tanisha Heiberg; Editing by James Macharia and David Evans)