JSE-listed Clover on Monday said it planned to re-enter the yoghurt market by the first quarter of 2015 following the conclusion of its contract with Danone Southern Africa at the end of the year.

The branded consumer goods and beverages group approved a R150-million investment in a yoghurt production facility to take advantage of the new market opportunity.

Clover planned to secure about 20% of the market over the next five years.

The investment formed part of R320-million in approved capital expenditure as Clover shifted its focus from the now concluded three-year revamp project, Cielo Blu, to joint ventures (JVs), acquisitions and new projects.

Following the success of the Cielo Blu project, which was expected to yield savings of some R96-million in the year ahead, Clover embarked on a number of additional capital projects expected to deliver further efficiencies and costs savings, CEO Johann Vorster said at the group’s interim results presentation in Rosebank.

This included the R113-million Clayville chilled distribution expansion, advancing fire protection across the group’s facilities, the R33-million consolidation of Clover’s Cape Town factory and the R12-million expansion of the Ixopo milk procurement depot.

Last week, Clover and cereals and functional foods producer Futurelife entered into a 50:50 JV to launch a new range of functional food products.

Clover will be in charge of production, sales, distribution and merchandising.

This followed the conclusion of Clover’s 70:30 JV with Nestlé South Africa, which saw the formation of Clover Waters.

Clover had injected R58.5-million to acquire Nestlé’s Gauteng-based Doornkloof property, bottled water manufacturing facility and water rights, as well as the right, by way of licence, to manufacture, distribute, market and sell bottled mineral water under Nestlé's Pure Life, Valvita and Schoonspruit brands, as well as ice tea under the Nestea brand, which was set to be launched later this year.

These brands complement Clover's Aquartz bottled water and Manhattan ice tea brands, which were now manufactured, distributed, marketed and sold under the Clover Waters flag.

FINANCIAL RESULTS
Despite operating in a market marked by rampant inflationary pressures, impacting both input costs and the consumer base, Clover delivered higher earnings for the six months to December.

Headline earnings a share jumped 90% from 40.7c during the first half of the 2013 financial year to 77.3c apiece during the interim period under review.

The group’s first-half earnings a share reached 87c – an 87.5% jump on the 46.4c recorded during the prior corresponding period.

Clover’s profit increased 95.4% from R83.9-million during the interim period in 2013 to R163.8-million during the first six months of the 2014 financial year.

Revenue increased 104% from the previous comparative period to R4.32-billion on the back of selling price increases implemented during January 2013 and July 2013 to recover higher input costs driven by inflationary pressures.

“Although from a relatively low base owing to the once-off costs relating to price promotions and new product launches in the prior period, we are pleased to have delivered a good performance in the challenging operating environment that continued to be marked by rampant inflationary pressures, which impacted on input costs and the consumer base,” Vorster said.

However, he warned that the current environment would make it difficult to achieve sales volumes growth and, therefore, earnings growth in the second half.

“In spite of this, we are focused on building on the solid base provided by Project Cielo Blu by continuously investing in new products and technology, in addition to delivering synergistic acquisitions and JVs that will sustain momentum and deliver on our longer-term strategy locally and across Africa,” Vorster concluded.