BACK IN FINE FORM
REPORTING A 36% INCREASE IN headline earnings per share to 82,8c/share for the first half to end-December 2006, food and semi-durable brands conglomerate AVI also pleased its shareholders with an interim dividend of 30c/ share.
While the contribution from all businesses in the group (bar the Real Beverage Company and Denny Mushrooms on an operating profit level) contributed to the gains, it was the turnaround at fishing business Irvin & Johnson (I&J) and the growth in high-end shoe retailer A&D Spitz (revenue up 38,5% and operating profits up 44,7%) that really shone. OPPORTUNITIES • The Real Beverage Company posted an excellent 25% revenue gain, but inefficient distribution and higher packaging material prices translated into a R9,7m operating loss for the business. Management has its eye on this ball and is determined to turn the situation around. • The restructuring of AVI, which has introduced even more efficiency as support services are centralised and shared, has had definite benefits. • A 15% decline in production volumes at mushroom business Denny was partially offset by better selling prices for both fresh and canned mushrooms. AVI says management changes have been made to address the poor performance. RISKS • I&J’s success depends heavily on exogenous factors. • The overall improvement in the I&J stable was dragged down by a R10,9m net loss of its Australian joint venture with Simplot.