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Foods give Pick 'n Pay supplier Libstar a boost

Consumer goods company Libstar Holdings reported a revenue and profit boost in its grocery segment in the financial results for the year ended 31 December 2019 on Wednesday.

The company, which produces food for private brands Shoprite/Checkers, OK, Pick 'n Pay and Usave, reported that its revenue increased by 2.4%. Food related-categories, which account for 95% of the group’s revenue, recorded a 3.3% increase, with the home and personal care cluster, which accounts for 8% of the group’s revenue, seeing a 6.8% decline.

Due to the group’s reduction in net interest expense, normalised earnings from continuing operations went up by 20.5% to R506 million (84.7 cents per share). Normalised headline earnings also increased by 20.3% to R508 million, while normalised HEPS from continuing operations saw a 14.1% increase to 85.1 cents.

The group reported a profit margin increase of 1.6 percentage points to 24.0% from 22.4% in the previous period, mainly due to lower input costs on dry condiments, more efficient production, and a focus on better procurement practices, among other things, said the statement. 

Last year in October, the company increased its footprint in the grocery market by acquiring the full business operations of Healthwise Foods Proprietary Limited - a fruit juice, rooibos tea and spices distributor - for R50 million.

The group continues to identify more growth areas as it invests in invest in capacity-enhancing projects, with capital expenditure of R401 million from the last period’s R349 million.

Gross profit margin had a domino effect on the normalised operating profit which increased by 3.8%, while final dividends of 25 cents per share were declared.

Libstar’s share price declined by 5.11% to R6.31.

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