AVI gets a lift from Simplot sale

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AVI gets a lift from Simplot sale

Published Date: 2020-02-07 | Source: Stephen Gunnion | Author: Stephen Gunnion

AVI gets a lift from Simplot sale

The consumer goods group says 2020 earnings will be boosted by the sale last year of its interest in the Simplot Australia joint venture.

AVI Limited says it will report a strong rise in full-year earnings thanks to the disposal of its 40% stake in its joint venture with Simplot Australia.

In a trading statement, the fast-moving consumer goods group said the sale resulted in am after tax capital gain of around R370 million. Together with its latest internal forecast of full-year trading profit, it says it's likely to grow earnings per share (EPS) by between 25% and 35% from the 488.7c reported last year.

In the meantime, the group will also report a rise of between 35% and 37% in interim EPS when it reports back for the six months to end-December next month. However, in an update last month it said headline EPS - which exclude once-off items such as the Simplot sale - were likely to be 3% to 5% lower than a year earlier.

Load shedding in December exacerbated a challenging trading month for the group, affecting its retail brands in particular. That ended an already tough period due to weak consumer spending, competitor discounting and the impact of Black Friday sales, which diverted consumer spending and constrained December trading.

First-half revenue rose just 1% but its gross profit margin was well protected and costs were carefully managed, resulting in a small improvement in operating profit. Its food and beverage businesses performed well in a difficult environment, growing operating profit ahead of inflation. This was offset by a decline in its personal care and footwear brands, including weaker sales at upmarket shoe chain Spitz over December.

Its shares ended trade 0.4% down at R77.45 yesterday. Its interims results are scheduled for release on 9 March.





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