Still milking it
RECENT RESULTS FROM Clover showed a decrease in profits as new product lines, marketing expenses and increased expenses (such as fuel) hurt the bottom line. Operating margins came in at 4.3% down from 5.1% previously but the company is still targeting 6.5% as a minimum.
The company remains in a strong position and continues to align itself with consumerfacing products. This includes the acquisition of The Juice Co and the more recently announced deal with Nestlé to distribute, market and sell bottled mineral water under Nestlé’s Pure Life, Valvita and Schoonspruit brands and iced tea under the Nestea brand.
This has long been one of the main attractions of Clover – it delivers strongly branded, mostly cold perishable consumer products to literally thousands of stores every day, and adding new products is easy and highly profitable for it. Last, its preference shares expire in June this year and will be paid out (not converted) and this will free up further cash f low in the company, saying it will revisit the dividend policy for ordinary shareholders and an increase from the 25% pay-out ratio is likely.
*The writer holds shares in Clover.