AVI looks forward to earnings increase

Johannesburg – Consumer group AVI [JSE:AVI) said on Thursday its consolidated headline earnings per share for the continuing
operations for the year ended June 30 2010 are expected to increase by between 11% and 16% over the comparable period in the prior year.
  
The consolidated earnings per share for the continuing operations of the group including net capital gains and losses on the disposal of assets, are expected to reflect an increase of between 6% and 11% over the comparable period in the prior year.
   
The group said its revenue for the year to June 2010 was 2.3% higher than last year with growth in most business units offset by a significant decline in I&J's revenue due to a combination of lower export selling prices, a stronger rand and lower volumes following the reduction in the hake total allowable catch.
   
Demand for the group's other food and beverage brands was satisfactory in the context of constrained consumer spending and they all achieved revenue growth as a result of either higher volumes or the annualising impact of price increases taken in the prior year.
  
AVI's personal care and footwear brands performed strongly, benefiting from price increases implemented in the second half of the last financial year as well as solid volume growth.
  
All business units, aside from I&J, delivered robust improvements in operating profit.
   
"This strong performance has more than off-set the significant decline in I&J's operating profit and both consolidated gross profit and
consolidated operating profit are higher than last year.
   
"The anticipated improvement in Snackwork's profit margins in the second half of the year, due to lower commodity costs and progress with factory efficiencies, has been particularly pleasing," it said.
   
The group said its board remains committed to disinvesting from the Argentinean hake and shrimp operations conducted by Alpesca, a wholly owned subsidiary of I&J.
  
A material impairment provision will be raised in the final results from discontinued operations for the year ended June 2010 to recognise the possibility that the sale process may result in a consideration below the carrying value of the operating assets, it said.
 
"There has been a higher level of interest by prospective buyers in the second half of the year and we are optimistic that a disposal will
be completed during the next year," the company said.
   
Alpesca's operating results during the year have been compromised by lower export prices, the weak Euro and material labour disruptions.
   
Consequently this operation is expected to report an operating loss compared to the small profit in the prior year.
 
It is expected that AVI will release its final results for the year ended June 2010 on September 6 2010.

- I-Net Bridge