South Africa’s Libstar to invest US$6.65m in upgrading three facilities

SOUTH AFRICA – South African food producer Libstar Holdings has 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 plans 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.

Export market to boost revenues

The producer of food products such as Denny mushrooms, Pringles and the Lancewood dairy range, generates 10% of total earnings from exporting chickens and wants to grow the contribution to 15%-20%, reports Business Day

The increase in exports will boost the group’s core businesses, which account for 88% of its revenue. The move form part of the company’s strategy to mitigate the subdued consumer spending and weak retail environment.

Libstar’s Chief Financial Officer, Robin Smith said that the export plans included increasing volumes of fully-cooked chicken exported to McDonald’s in the Middle East and Mauritius.

“These countries require fully cooked chicken. We cannot export raw chicken to these markets. We have that capability of exporting fully cooked chicken,” Smith said.

It aims to increase its penetration of independent retailers, wholesalers and exports by investing further in plants and equipment, as well as on specific earnings-enhancing capital projects to boost output.

Libstar CEO Andries van Rensburg said the company’s focus for the remainder of the year included improving manufacturing efficiencies, reducing operating costs through improved productivity and investing in new technologies and capacity-expanding projects.

“The second half is expected to reflect the benefits from the commissioning of the par-bake frozen plant in late May and the Pringles manufacturing plant in June,” Rensburg added.

The company has also entered into a binding sales agreement to exit the noncore dairy-blend and fruit concentrate beverage operations.

Libstar is one of the leading producers of consumer-packaged goods in South Africa dealing with fresh foods, including mushrooms, cheeses spices, ready meals, snacks, confectionery and baked goods.

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