Libstar flags virus threat to exports
• The group’s full-year profit increased by 25.4% to R279.6m
Listed consumer goods group Libstar has flagged the threat of the coronavirus to its export sales it had planned to increase in 2020.
The producer of food products such as Denny mushrooms, Pringles and the Lancewood dairy range said in 2019 it would increase the contribution of exports to earnings in a bid to boost the firm’s core businesses: perishables, ambient groceries, snacks and confectionery, and baking aids.
Speaking after the release of its financial results for the year ended December 31, CEO Andries van Rensburg said the company had not experienced disruptions as a result of the outbreak.
“All of our suppliers have been supplying us in full, even those in Italy. We are in constant communication with all the suppliers of finished goods and raw materials. There has been no indication that there is a shortage of products. It is business as usual. The most important thing for us is to protect our people,” Van Rensburg said.
In the 2018 financial year, Libstar exported products to 57 countries. The main export destinations were the US, Germany, Australia, the United Arab Emirates, the UK, Japan and several countries in the rest of Africa. In 2018, Cape Herb & Spice contributed 44% of the group’s revenue derived from exports.
Libstar said that while “no materially adverse effects have been experienced to date, the post year-end outbreak of the Covid-19 virus across the globe, does pose a risk for the export sales channel and imported shipments groceries.”
Libstar s full-year profit increased ’by 25.4% to R279.6m. Revenue increased by 2.4% from R9.6bn to R9.89bn. Normalised headline earnings per share were up 14.1% to 85.1c per share.
Normalised operating profit, which excludes the effects of accounting changes, increased 3.8%, with the group saying margins improved to 8.6%, from 8.5% previously. of
EFFICIENCIES
value-added
“Lower dry-condiment input costs, favourable sales mix changes in dairy, value-added groceries, baking products and baking aids, as well as the group’s continued focus on procurement practices, production efficiencies and overall equipment effectiveness, contributed to the improved margin result,” it said.
The group, which was established in 2005, generates 92% of its revenue from food products such as dairy, meat, groceries, baking and snacks.
Libstar said it was already benefiting from new investments in capacity at its production facilities and new software.
Libstar’s investments in the year included a standardising group software, which has already resulted in improved profit margins, according to CFO Charl de Villiers.
He said Libstar used the new software to reconcile all its transactions. “It allows us to analyse margins in greater detail,” he said.
The group had invested R122m at Lancewood, of which R73m has been earmarked to upgrade the milk-receiving area, distribution centre and certain hard cheese packing lines.
It invested R24m to triple the convenience-food production capacity of Millennium Foods and added the capability to produce frozen meals to retail and food service customers. The Cape Town-based Millennium Foods produces ready-to-heat and grab-and-go meals.
Libstar was down 5.86% to R6.26 on Wednesday.
LIBSTAR SAID IT WAS ALREADY BENEFITING FROM NEW INVESTMENTS IN CAPACITY AT ITS PRODUCTION FACILITIES