Libstar dishes up higher earnings

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Libstar dishes up higher earnings

Published Date: 2020-03-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Libstar dishes up higher earnings

The branded food producer and distributor has benefited from improving profit margins and a lower interest bill.

Libstar has reported a strong rise in full-year earnings as it improved its profit margins and paid less interest.

Higher sales of food products more than compensated for a dip in home and personal care (HPC) goods over the year to end-December. And it reduced its net debt by R700 million using the cash it raised when it listed on the JSE almost two years ago, resulting in a 31% decline in its net interest expense to R154 million.

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 like Shoprite, Pick n Pay, Spar and Woolworths with their own private label products.

Revenue from its food-related categories, which make up 92% of turnover, rose 3.3%, while its HPC division reported a 6.8% decline. The group has been restructuring and rationalising its HPC offering, which it said would impact revenue growth this year but would lead to cost benefits further down the line.

Total revenue from continuing operations rose 2.4% to R9.89 billion over the year to end-December and normalised operating profit improved by 3.8% to R855 million on a like-for-like basis. The normalised numbers exclude non-recurring, non-trading and non-cash items, which it says measures its true operating performance. On the same basis, normalised headline earnings per share (HEPS) rose 11% to 82.7c, including the impact of new accounting standards that affect how it accounts for leases and financial instruments. Excluding the impact, they were 14% higher at 85.1c. It has declared a final dividend of 25c per share.

While it hadn't yet experienced any material adverse effects from the outbreak of the Covid-19 virus across the globe, Libstar said the pandemic posed a risk to export sales and imported shipments of value-added groceries.

Its shares fell 5.9% to R6.26 yesterday.





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