Dou­ble-digit growth for food maker Lib­star

Pretoria News - - BUSINESS REPORT - SANDILE MCHUNU [email protected]

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.

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