SOUTH AFRICA – Libstar, a Consumer-Packaged Goods company, has signed a sale agreement to divest its Chet Chemicals business unit, making significant strides in its goal to minimize exposure to non-food categories.
The Group will continue to explore strategic options related to its only remaining non-food business, Contactim. Effective 31 August 2024, Libstar also resolved to exit its current beverage manufacturing operations by closing the Franschhoek-based Chamonix Spring Water plant.
The company recorded revenue growth of 5.2% for the first half of 2024, despite the challenging market landscape, intensified by adverse economic conditions.
The Group said growth was driven by the strong performance of the Ambient Products category, which grew revenue by 9.1%.
The gross profit margin increased to 21.5% after an effective price realisation, cost management, improved product basket mix and production efficiencies.
The retail and wholesale channel revenue contribution increased slightly to 59.2% from 58.3% H1 2023. However, some of the group’s main challenges include persistent retail channel volume pressure and food service channel volumes being impacted by weak consumer demand. The food service channel revenue contribution decreased to 18.7%.
CEO Charl de Villiers confirms that while there has been an improved performance of fresh mushroom production, it is still detracting from the group’s performance, while operational challenges remain for snacks, which caused production inefficiencies and product launch delays.
Similarly, the Cape Foods business is on track to finalise the simplification of its operating structures within the newly established Perishables Products (previously Perishables) and Ambient Products (previously Groceries, Baking & Baking Aids and Snacks & Confectionery) super-categories by the end of 2024.
It also assumed production of dry condiment products that were previously produced by the Retailer Brands business unit, while the Cape Herb & Spice and Khoisan Gourmet divisions were integrated to yield rationalisation benefits.
“Notwithstanding the recent moderation in food inflation, consumers remain financially constrained, evidenced by a moderation in retail and food service channel group sales growth in the eight-week period after the reporting date,” De Villiers commented.
“Enhancing customer service and achieving cost efficiencies through targeted initiatives will continue to be a key priority for driving sustainable improvements in operational performance and margins.”
Looking forward, the Ambient Products category will remain focused on executing on its strong pipeline of export orders and growing its food service product range both locally and internationally.
The company also completed a solar installation at the Amaro Foods plant, in Cape Town.
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