KATHARINE CHILD and NICO GOUSPremier Food group says many SA companies are using load-shedding as an excuse for poor financial results.
Premier – which owns Blue Ribbon bread, Snowflake flour and Iwisa maize meal – has shrugged of the impact of load-shedding, saying it won’t “materially affect” its financial results.
Premier’s relaxed attitude to blackout costs sets it apart from other food producers, who have voiced strong concerns about power cuts limiting their profitability and SA’s food security.
Premier operates 13 bakeries, seven wheat mills, three maize mills and a range of manufacturing plants for its Manhattan sweets and female care Lil-lets business.
CEO Kobus Gertenbach said the company did not run its flour and maize mills – which rely solely on Eskom – during load-shedding due to the expense.
The company’s newly established megafactory in Pretoria used significantly less energy for bread baking. Some businesses used load-shedding as an excuse, Gertenbach said.
“People use these types of excuses for a lot of other things that they don’t do well. We’ve decided as a business that we’re not going to sit and cry over things that we can’t control. We’re going to try to figure out ways to deal with them and manage them.”
Premier, spun out of holding company Brait in March, incurred substantial costs to list the business on the JSE in March, but it did not make “a song and dance” about the expense or use it as a reason for non-performance, he said.
Premier’s bread-making factories in Isando, near OR Tambo International Airport, and Durban were fortunate to be spared regular load-shedding due to infrequent power cuts in those areas. However, its bread factory and mills in Cape Town and the south of Johannesburg frequently experienced blackouts and disruption.
According to former Eskom CEO Andr& xE9; de Ruyter in February, Eskom has engaged in discussions with food producers, farmers, and the department of agriculture regarding load-shedding reduction to ensure food security. De Ruyter wrote: “Eskom has already facilitated relief for some entities, such as Premier Foods’ milling plants.”
This suggests that certain Premier plants experienced a reduction in power cuts.
Chicken producers competed with cheap imports and were unable to incorporate their load-shedding costs into product prices, he said.
By contrast, all bread manufacturers, including Premier, operated locally and encountered the same power constraints.
Despite increasing product prices, Premier managed to increase volumes 1% in the past year as consumers continue to purchase bread, flour and maize. Clark said: “The price-conscious consumer is buying the basics.”
About 83% of the company’s revenue comes from its bread, flour, and maize products, and Gertenbach said Premier’s focus was driving a 19.1% return on invested capital.
Premier's distribution centre. The firm owns the Blue ribbon Iwisa, Snowflake, Lil-lets and Manhattan sweets brands. Picture: SUPPLIED