SOUTH AFRICA – South African food producer AVI has reported 6.1% rise in headline earnings per share (Heps) to 530.6c from 499.9c in the full year ended June 2022.
The group’s revenue increased by 4.3%, supported by a combination of improved sales volumes in key categories and price increases to ameliorate significant cost pressures.
According to the trading update, the company achieved the stellar performance despite suffering from tight trading conditions across its divisions on the back of pandemic-related market disruptions, the July unrest, and rising inflationary pressure that impacts consumer spending.
Supply chain disruptions led to an overall spike in the group’s selling prices to balance out expensive supply chain and raw material costs.
“The group’s performance in the first semester was disrupted by the civil unrest in July 2021, with all of our facilities and retail stores closed to safeguard our staff.
“Direct losses amounted to R38.1 million (US$2.15m), asset and trading losses were insured and R69.7m was received and recognised in the year.
“The impact of rising commodity prices and the sharp increase in the cost of fossil fuel and other commodities intensified in the second semester,” AVI said.
The food and beverage segment, comprising of tea and coffee producer Entyce beverages, biscuit and snack maker Snackworks and wholefish provider I&J, made up most of the revenues totalling 80.6 percent, and fashion brands brought in the rest.
Snackworks, whose brands include Bakers and Provita, achieved 33.96 percent of their revenue, while Entyce Beverages, which produces Five Roses and Freshpak gained 28.76 percent in revenue.
I&J’s revenue of R2.47 billion (US$139m) was 5.1 percent lower than last year while operating profit decreased from R341.6m (US$19.24m) to R307m (US$17.29m). The operating profit margin declined from 13.1 percent to 12.4 percent.
In its personal care segment, Indigo’s revenue of R1.18 billion (US$66.45m) was 2 percent higher than last year, while its Footwear and Apparel segment registered a 3.1 percent rise in revenue to R1.51 billion (US$85m).
Looking ahead, the group highlighted that its financial prospects depended on how the domestic economy performs in the next year.
“Ongoing disruptions to global supply chains, domestic and international inflationary pressures, and the prevalence of load shedding are likely to persist, and while the group is operationally geared to manage the challenges, there are costs to doing so.
“Of equal importance is the impact these factors may have on our consumers. Real incomes continue to decline, and unemployment remains high, especially for younger South Africans,” AVI said.
During the period under review, AVI had commenced engagements with multinational snacking giant, Mondelez international, in respect to acquisition of its food segment.
However, the deal talks faltered barely a month after revelation of the engagements to the public.