JOHANNESBURG – Listed Food group Libstar Holdings yesterday reported a 16.1percent fall in full-year normalised earnings weighed down by the impairment in the niche beverages category.
The producer of Denny mushrooms, Pringles and the Lancewood dairy range, among others, cited the struggling economy and subdued consumer spending as a reason for the slowdown.
The group, which raised R3billion in primary and secondary capital at its listing in May last year, reported revenue increase of 12.5percent to R9.8million from R8.7m.
The group’s organic revenue was increasing by 5.1percent, which was bolstered mainly by the successful launch of its Lancewood-branded dairy products, including the taste-differentiated yoghurt in the third quarter of 2018.
Libstar had an impairment loss of R42m due to residual dairy-blend and fruit concentrate beverage operations, as it weighs its strategic options in this component of the business.
Normalised basic and diluted headline earnings per share for the full-year ended December 31, 2018, fell to 73cents from 87c in the previous year.
Normalised Earnings before interest and taxation increased by 1.4percent to R819m from R807m, while normalised earnings before interest, tax, depreciation and amortisation increased 4.6percent to R984m.
“Going forward, food inflation is likely to range between 0 and 2percent, with growth therefore to be more volume-related,” the group said.
“In a difficult market environment, the group will continue to focus on its strategy of supplying innovative products and will ensure that it remains a low-cost manufacturer of quality, value-added products.”
Libstar announced a maiden cash dividend of 22c a share as profits after tax in 2018 edged 1percent higher to R236m.
It said its focus in the upcoming financial year would include the establishment of a new tea plant for the local and export market as well as a Pringles plant to manufacture the snack for a third party.
The group said that it would also expand its prepared meal capacity to further tap into the growing convenience market as well as a new soft cheese value-adding and packing facility.
Libstar said it would also consider acquiring businesses that could add scale, provide additional capacity, new capabilities or new entry-points to high-growth categories.
“However, Libstar is not acquisition-dependent, the group did not conclude any acquisitions in the 2018 financial year, but focused on the integration and expansion of the three acquisitions made late in 2017, namely Sonnendal Dairies, Millennium Foods and Khoisan Tea,” it said.
Libstar’s shares closed 10.28percent higher at R7.83 on the JSE yesterday.