Double-digit growth for food maker Libstar
SOUTH African food producer Libstar Holdings reported a double-digit growth in earnings for the year to end December with its perishables division the star performer.
The division, which is the largest contributor to the group’s revenue and earnings before interest, tax, depreciation and amortisation (Ebitda), houses brands such as Lancewood cheese and Denny mushrooms and reported a 12.3 percent increase in normalised Ebitda to R510.44 million.
The consumer packaged goods company’s overall normalised Ebitda increased by 5.1 percent to R984.46m.
However, including the new accounting standards, the group’s normalised Ebitda surged by 19.2 percent.
The group invested R401m in the capacity enhancing projects during the year as it continued to allocate capital to new technologies, efficiency improvements and capacity expansion in key growth categories.
This included R23m invested in new technology in the Amaro Foods manufacturing facility, R13m to upgrade the Cape Herb & Spice tea plant, R22m to upgrade Ambassador Food’s bar lines and R122m at Lancewood, of which R73 million was earmarked to upgrade the milk-receiving area, distribution centre and certain hard cheese packing lines.
As a result, group revenue from continuing operations increased by 2.4 percent to R9.9 billion while normalised operating profit increased by 3.8 percent to R854.8m, with an improved margin of 8.6 percent mainly as a result of the group’s improved gross profit margin performance.
Chief executive Andries van Rensburg said the past year had underscored the resilience of Libstar’s business model and the importance of its culture and value proposition in the market.
“Our strategic focus has been to grow the four key food categories in our portfolio through innovative value creation, expanding our world-class manufacturing capabilities, improving our commercial efficiencies and by forging deeper partnerships with our customers.
“We have also optimised our portfolio and sales mix, reduced volumes on commodity lines and focused on our value-added products and brands,” Van Rensburg said.
Looking ahead Van Rensburg said their food categories would remain at the heart of their growth strategy, despite the difficult market conditions in which they operated.
“We are confident of our low-cost manufacturing capabilities, our ability to capitalise on key consumer trends, our value of customer centricity and the delivery of returns from capital projects during 2020 and beyond,” he said.
Its normalised headline earnings from continuing operations increased by 20.3 percent to R508m and normalised headline earnings per share from continuing operations increased by 14.1 percent to 85.1 cents a share while normalised earnings per share from continuing operations increased by 14.3 percent to 84.7c.
The group declared a final cash dividend of 25c during the period.
Libstar shares dropped 5.86 percent to close at R6.26 on the JSE yesterday.