Libstar benefits from investment spend


Libstar benefits from investment spend

Published Date: 2019-09-05 | Source: Stephen Gunnion | Author: Stephen Gunnion

Libstar benefits from investment spend

The food producer and importer says capex projects completed last year helped lift its first-half performance.

Libstar has reported what it says is a resilient first-half performance against a backdrop of a weak retail and consumer environment. The branded food producer and importer says its core categories kept it afloat in the six months to end-June. It put Elvin, its non-core dairy blend and fruit concentrate business, up for sale, booking an after-tax R59.4 million impairment against it.

Libstar's brands include Amaro Foods, Ambassador Foods, Denny Mushrooms, Finlar, Lancewood and Montagu Foods, amongst others. The company also represents global brands including Kiri, Arla, Bel, Laughing Cow, Act II, Lurpak, Tabasco, Kikkoman and Maille. And it supplies retailers including Shoprite, Pick n Pay, Spar and Woolworths with their own private label products, with growth of white label goods outstripping branded products.

The group said it benefited from capex projects completed last year, including new granola and meat slicing plants and the expansion of its health bar capacity. It said it was yet to see the benefits from a new chicken plant as it developed new markets locally and for export. The integration of Montagu Foods and Denny mushrooms was also slow to come online after it had problems with equipment that were only recently sorted.

Revenue rose 4.6% to 4.62 billion the six months to end-June and normalised operating profit increased by 5% to R339 million. Earnings per share fell 28.7% to 8.7c due to the exit and impairment of Elvin. Normalised headline earnings per share, which exclude the impairment, came in 12% higher at 30.9c. It doesn't pay an interim dividend and said it would assess its position at the end of the year. Last year, it paid a maiden dividend of 22c per share.

The group said the second half of its year was expected to reflect the benefits from the commission of its par-bake frozen plant and a manufacturing plant for Pringles. It expects to start local production of Kiri and Laughing Cow soft cheese in the fourth quarter of the year.

After gaining as much as 5.5% in early trade, its shares closed unchanged at R7.10 yesterday.

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