LIBSTAR, a food producer whose brands include Denny mushrooms and Lancewood cheeses, said yesterday it had improved earnings as it navigated challenging market conditions during the 2021 financial year amid unprecedented supply chain disruptions.
The company released its annual results for the year ended December 31, 2021, and reported that its normalised headline earnings per share grew by 18.8 percent to 80.4 cents.
Revenue increased by 7 percent and its volume sales increased by 0.5 percent.
“Price increases and changes in sales mix contributed 6.6 percent to group sales growth,” the company said.
Libster's gross profit margin declined from 24 percent to 23 percent, which the company attributed this to lower export margins and the rising costs of raw materials and packaging due to the local and international supply chain challenges.
“The immediate impact of these cost increases was exacerbated, as there is a timing lag between the increases and their recovery through selling price increases,” said Libstar.
The board declared a final cash dividend of 25 cents per ordinary share, which was unchanged from the previous year.
Chief executive Andries van Rensburg said: “Our response during the year continued to be one of ‘protection’ – protecting the safety of our people, protecting the financial stability of the group, and protecting our customers.
“We believe the success of this strategy is demonstrated in these results. A key feature of the year under review was also the repositioning of our portfolio toward our four value-added food categories. Exiting our Household & Personal Care businesses will allow us to focus exclusively on the growth of our core business.”
The group reported a resilient performance from Libstar’s food categories which contributed to an improved cash conversion ratio of 96 percent compared to 83 percent in 2020.
The company said it successfully refinanced its long-term debt facilities of R1.7 billion.
Operating expenses decreased by 6.7 percent from R1.97bn to R1.84bn, including the R73.3 million pre-tax impairment of all intangible assets attributable to Glenmor Soap, in which it holds a 70 percent equity interest.
The company plans to exit its investment in Glenmor during the current financial year, depending on market conditions.
Last month, the group announced it had reached a deal to sell its underperforming household and personal care division for R217.3m.
“The group has taken active steps to reposition its portfolio of businesses toward valued-added and higher-margin food categories. The discontinued operations contributed a R148m loss,” it said.
Van Rensburg said the company had launched its incubator, Libstar Nova, meaning New Star.
“Libstar Nova will discover the future new business stars for Libstar, which will assist us to grow innovatively in our existing and adjacent categories, to acquire talent, and to increase our speed to market in a changing landscape.
“We are going back to our roots and will execute these acquisitions as we did at the creation of the group when we acquired majority shareholdings in owner-managed businesses,“ he said.
Van Rensburg said the first acquisition of Umatie, a frozen baby food manufacturer, was concluded in January.
“Other acquisitions are pending in health and pet food," he said.
BUSINESS REPORT ONLINE