Sasko

The year was characterised by trend-breaking volume performances. In line with total industry consumption, wheat throughput declined during the year with white maize consumption increasing substantially. Both these changes are in contrast to the historic long-term growth in wheat consumption and the stable consumption trend for white maize.

The demand for staple food products remained resilient in the market, despite the overall decline in economic activity. The various grant support programmes that the government provides, are supportive of this trend, particularly in rural areas where the business is well represented. Overall, the business benefited from the year-on-year decline in grain commodity prices and initial decline in fuel prices, although the substantial rise in electricity costs towards the end of the year is an addition to the cost base.

The continued upgrading of, and capacity creation at, the white maize milling facilities, with the increasing market presence of White Star super maize meal, rendered a pleasing return on investment and profit contribution during the year. The White Star brand has contributed more than R1.5 billion to revenue in the 2009 financial year. This is quite an achievement as it has occurred within 10 years of the product’s launch.

Total rice and legume sales volumes ended below last year’s results despite the decline in international rice prices. The continued increase in sales volumes of the Spekko branded premium rice products was satisfying.

The performance of the bakery business improved notably compared to the previous year on the back of a sound, although slightly reduced volume base. The benefits derived from reduced wheaten flour input and distribution costs contributed to this performance. During the 2009 year, a change in brand focus was implemented with the various historic bread brands all consolidated under the Sasko brand.

The pasta business again posted excellent results with a continued resilient demand for pasta products, which could be indicative of an overall increased per capita consumption.

Bowman Ingredients continued its good performance during the year and performed well in the recessionary environment. Satisfactory volume growth was achieved from both more expensive value-added products and cheaper composite products. A number of innovative new products were launched, with the newly developed maize rusk being particularly well received.

The businesses in the other Africa countries posted varying performances. Whereas the global recession had a definite negative impact on the businesses in Zambia and Uganda, the Botswana and Namibian joint ventures performed well.

Sales volumes of wheaten and maize products in Botswana and Namibia mirrored the trends in South Africa, with the sales and distribution of some Pioneer Foods products through these operations continuing to post positive growth. Future expectations of both these businesses remain positive with investments in upgrading facilities under way or planned.

In contrast, however, the economy in Zambia was adversely affected with a sharp decline in the price of copper. The declining disposable income negatively influenced the ability of livestock farmers to purchase day-old broilers and pullets. This had the effect that volumes in both Uganda and Zambia declined.

A general manager for the Africa business was appointed during the year under review and is based in Lusaka. This is a first step in an increased focus on Africa for future growth.