Food producer Libstar has seen an improvement in trading conditions in the fourth quarter, after a weaker than expected third quarter performance resulting from soft retail and food service channel demand and delayed export shipments from the Cape Town harbour.
The group said in a voluntary pre-close trading update on Wednesday that its year-to-date revenue for the period ended November 22 increased by 2.5%. Price and mix changes contributed 5.4% of revenue growth, against a volume decline of 2.9%.
The group’s products include Lancewood, Denny Mushrooms, Goldcrest and Cape Herb & Spice.
Perishable products category revenue increased by 0.4%, with selling price inflation and mix changes contributing 3.8% to sales growth. Sales volumes declined by 3.4% driven mainly by lower quick-service restaurants (QSR) beef volumes in the food service channel.
In this division, the group's Lancewood brand successfully increased its market share in the soft cheese and yoghurt categories, while maintaining its position as the market leader in the natural cheese category, despite heightened price competition, the group, which is valued at R2.8bn on the JSE, said.
The value-added meats subcategory underperformed as a consequence of lower QSR beef volumes, partly offset by increased demand for retail and contract manufactured fresh and frozen chicken products.
Ambient products category revenue increased by 4.9%, driven by the performance of the condiments subcategory performance. Price and mix changes contributed 7.4% of revenue growth. The volume decline of 2.5% resulted primarily from the implementation of a direct import model by a retail customer during the first half.
In this division, wet condiments’ performance was driven by strong retail channel demand and improved contract manufacturing volumes. The dry condiments subcategory benefited from improved capacity utilisation and production efficiencies after the transfer of production lines between business units earlier in the year.
The baking category continued to be affected by weak demand for wraps in the QSR sub-channel, but this showed some recovery into the fourth quarter. The snacks category delivered an improved trading result from the start of the second half, albeit still lagging the prior year, the group said.
The group’s gross profit margins tracked in line with the prior year’s, notwithstanding a decline in sales volumes, reflecting the continued focus on price management, operational efficiencies and cost-savings, it said.
During the period Libstar agreed to dispose of its interest in Chet Chemicals, which forms part of its household and personal care category, to Mithratech. The transaction will be effective from December 30.
Libstar expects to publish its full-year results on March 18 2025.
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