Associates
Earnings R371m (2018: R731 million) Contribution to headline earnings
(2018: 28%) |
 |
As previously reported, the company ceased to equity account the earnings of Oceana with effect
from 1 December 2018, following the decision in November 2018 to unbundle the company’s
investment in Oceana. The total income from associates is therefore not comparable with that
of the prior year. Excluding Oceana, all other associates reported an increase in earnings.
Chile: Empresas Carozzí (24,4% held)
Empresas Carozzí S.A., a Chilean company headquartered in Santiago, is one of the largest and most respected South American food producers that has manufacturing operations in Chile, Peru and Argentina. Carozzí has two main business areas: fast-moving consumer goods and agro-industrial (business-to-business) products. Its main customer markets are Chile and Peru.
Chilean economic growth slowed amid the trade negotiations between the world’s biggest economies that adversely impacted the copper price and other Chilean exports. The Peruvian economy has also seen negative effects while the impact of the recession in Argentina on the year under review was not material. Despite the challenging environment, the company’s consolidated net revenues increased 4,1%, and earnings before taxes increased 1,1% (in local currency). The growth in FY19 was driven primarily by the fast-moving consumer goods segment.
Nigeria: UAC Foods (49,0% held)
UAC Foods is a leading manufacturer and marketer of convenience foods in Nigeria, with respected brands in snacks, dairy products and beverages. The snacks category comprises Gala sausage roll, Funtime cupcakes, Funtime coconut chips and the new Gala Chinchin (a popular regional fried snack). The dairy category includes the Supreme range of ice-cream and yoghurt products, while the beverage category includes Swan Natural Spring Water.
UAC Foods Limited’s marginally improved performance this year is due to increased revenues arising from improved market penetration.
This improvement was despite operating in a highly competitive market that is yet to recover fully from a recession that has greatly curtailed consumers’ purchasing power. Production capacity constraints impacted volumes in the water category.
Zimbabwe: National Food Holdings Limited (37,4% held)
National Foods is a leading branded food manufacturer in Zimbabwe. In addition to maize and flour milling, the company produces a range of food products, including stockfeed, snacks and treats, rice, peanut butter and oil. This has been another tough year for the company, as a result of the country’s significant macro-economic challenges. Foreign currency shortages worsened in the past year and continue to create challenges for importers in settling foreign creditors.
The financial year saw the newly elected Zimbabwean government introduce reforms aimed at stabilising the economy. A local currency was reintroduced in February 2019. The reforms precipitated significant market corrections resulting in a decline in the value of the local currency and consequently significant inflation. The country also experienced a crippling drought and a devastating cyclone.
The group reported a profit growth supported by volume growth and improved margins. Performance was driven by the Maize and Stockfeeds divisions, partially offset by the Flour division.