Libstar gets profit boost from improved margins and JSE listing

SOUTH AFRICA – Consumer goods group Libstar says it expects double-digit profit in its year to end-December as it benefits from improved margins and a reduction in debt after it listed in May 2018.

The group, whose brands include Lancewood cheeses and Denny mushrooms, expects headline earnings per share to rise by 7.2%-12.2% compared to the prior period’s 74.6c. This includes the effects of accounting changes which bring leases on to the company’s balance sheet.

Gross profit margins improved in each of the group’s product categories, it said

Lower dry-condiment input costs, favourable sales mix changes as well as the group’s continued focus on procurement practices, production efficiencies and overall equipment effectiveness contributed to the improved margin result.

The group said its net interest expenses, excluding accounting changes, declined 30.7% to R153.7m (US$9.8m), as a result of a R700m (US$44.8m) reduction in net debt following its JSE listing in May 2018.

The company had raised about R3bn when listing.

During the 2019 financial year, Libstar Holdings announced that it will be investing a total of US$6.65 million in upgrading three of its facilities over the next six months.

The company planned to invest R57 million (US$3.86m) in dairy producer Lancewood, R26 million (US$1.76m) in its ready-to-eat foods business Millennium Foods and R15 million (US$1.02m) in Ambassador Foods.

Libstar announced the investment plan during its financial report for the six months ending June 2019. The company reported 4.6% rise in revenues with organic revenue growth from its core businesses up 5.3 percent.

Revenue from its non-core businesses, which are natural and flavoured waters and food packaging, representing 12% of group revenue, fell by 1.5% due to weaker outsourcing and export markets.

Libstar, whose noncore businesses include niche beverages, household and personal care products, and specialised food packaging, also supplies chicken and beef products to McDonald’s South Africa.

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