Shares in Libstar, a food producer whose brands include Denny mushrooms and Lancewood cheeses, yesterday leapt over 12 percent to R6 in intraday trade after it flagged that it expected its interim earnings to increase by up to 106 percent despite supply chain disruptions.
For the six-month period ended June, it said it was likely to see headline earnings per share (heps) to increase to between 95.7 percent to 106.3 percent to between 3.9 to 25.2 cents per share, with earnings per share (eps) to rise by up to between 90.5 percent to 100 percent to between 24 to 25.2c per share.
Libstar also said its group trading in the first half continued to be impacted by supply chain disruptions, significant cost inflation and consumer pressures.
Despite these challenges, revenue increased in all group categories, with total revenue up 9.6 percent. Volume sales grew by 6.9 percent, assisted by increased volumes of hard cheese in Lancewood, the Perishables category, and sauces, vinegars, and other condiments, the Groceries category.
Groceries category volumes increased year-on-year despite lower export volumes of value-added herbs and spices due to ongoing shipping delays.
Group gross profit margins were largely in line with the first half prior period despite significant raw material and energy cost inflation, it said.
Therefore, the group flagged it was likely to report growth of normalised earnings before interest and taxation (Ebit) with an increase of between 8.6 percent and 11.6 percent to between R342 138 and R351 592.
Unrealised foreign currency translation gains reduced from a gain of R1.1 million to a loss of R12.6m.
In its annual results released in March, Libstar had pointed out that it was repositioning its portfolio toward four value-added food categories.
The four food categories comprise Perishables, Groceries, Snacks and Confectionery, and Baking and Baking Aids, each comprising private label brands, own brands of the group and others.
It added that exiting its Household & Personal Care (HPC) businesses would allow it to focus exclusively on the growth of its core business.
Yesterday it said the HPC divisions of Chet Chemicals and Contactim remained classified as held for sale from the previous full-year reporting period, as the board continued to evaluate the strategic positioning of the HPC business to optimise the group’s portfolio composition and returns.
The non-current assets of Glenmor had also been classified as held for sale as the group completed the exit from this investment shortly after the close of the first half.
The HPC divisions of Chet Chemicals, Contactim and Glenmor reported a reduced operating loss relative to the prior first-half period.
“The improved operating result from HPC has contributed to the increase in the group’s expected H1 (first half) eps and heps from all operations,” it said
Libstar also announced the conclusion of an agreement for the acquisition of Cape Foods.
Founded in 2002 by Gerhard Martin, Cape Foods, based in Cape Town, is a manufacturer of a wide range of branded and private label herb, spice and seasoning blends.
The deal was in line with Libstar’s strategy to grow its basket of non-commoditised food products in existing categories as well as providing access to new markets and value-added products in the dry condiments category.
BUSINESS REPORT