Business

Pioneer Foods dumps the poultry business

Andre Janse van Vuuren

SA's second-largest food producer by value, Pioneer Foods, is calling it quits after a tough year in the broiler industry.

South African chicken producers have successfully applied for import tariffs to be raised by as much as 82% on certain cuts of the meat. (M&G, Madelene Cronje)

Pioneer Foods, South Africa's second-largest food producer by value, said it would spin off its poultry business within 12 months after it wrote down the unit's value by R232-million. 

"This impairment is largely the result of the continued macro challenges in the broiler industry," the Paarl, Western Cape province-based company said on Monday. "An abattoir and hatchery, as well as several farms in the Western Cape, were closed as a consequence."

South African chicken producers have successfully applied for import tariffs to be raised by as much as 82% on certain cuts of the meat amid claims that cheaper poultry from Brazil and Europe is undermining the local industry, raising the risk of job cuts in a nation where one in four people is unemployed.

The central bank on November 21 cut its estimate for economic growth to 1.9% this year from 2%, the weakest pace since a 2009 recession.

Pioneer's adjusted profit, excluding Quantum Foods and other discontinued operations, increased 12% to R4.56 a share in the year ended June 20, more than the median estimate of R4.24  by eight analysts surveyed by Bloomberg.

Revenue advanced 10% to R20.6-billion. The company declared a final dividend of 86 cents a share, raising the total payout for the year 16% to R1.32. – Bloomberg

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