Johannesburg – Consumer goods company
AVI [JSE:AVI] on Monday reported a double-digit rise in headline earnings per share, but said tough trading conditions constrained performance in its fish business.
AVI, whose brand portfolio include Bakers, Five Roses, Ellis Brown, and Carvela, posted a marginal 2.3% increase in revenue to R7.6bn, and said headline earnings per share grew by 13.7% to 198.7 cents per share in the year to June.
Total dividend paid out was 100c/ share, 13.6% up from last year. In addition, a special payment out of share premium of 75c/share has been proposed, subject to approval at the group's annual general meeting in October.
AVI CEO Simon Crutchley said the results were "pleasing", given the tough trading environment the company experienced in the previous financial year.
Revenue from the food and beverages brands (which include the frozen sea food business I&J) declined by 0.2%, while fashion brands (which include Spitz) grew revenue by 30%.
Crutchley said besides the I&J business (whose revenue declined by R215.8m), the rest of the group's businesses achieved good performance through a combination of higher volumes or the annualising impact of price increases taken in the prior year.
He said I&J's revenue declined was "due to a combination of lower export selling prices, a stronger rand and lower volumes following the reduction in the hake total allowable catch".
Similarly, AVI was unable to find a buyer for its Argentinian hake and shrimp business, conducted by Alpesca, due to the tough trading conditions in the frozen fish market.
Crutchley said the business nevertheless continues to be classified as a discontinued operation in line with the company's commitment to disinvesting from the asset. He hoped the company would get prospective buyers during the current year.
Looking ahead, the company believes that the variable demand, low economic growth and tough price competition which characterised the 2010 financial year could prevail for much of the coming year.
However, Crutchley said AVI has a number of exciting and material profit growth opportunities which will develop in the next year.
"These range from ongoing efficiency improvements to capacity expansion and growth in new formats, using our strong brand portfolio. Several major capital projects in support of this are already in progress, and further projects are being finalised for approval."
The company will spend between R300m and R400m for capital expansion in its new financial year, largely in its Snackworks division which includes Bakers.
AVI has been working on plans to increase its biscuit production capacity, but Crutchley said the decision will be taken in few months' time.
- Fin24.com