Consumer goods group AVI on Wednesday reported 7.8% growth in annual revenue even as its fishing business I&J faced a host of challenges, including a load-shedding related fire at one of its factories.
The company, whose products include Bakers biscuits, Five Roses tea and Green Cross shoes, said in a trading update that the fire at the facility occurred in April 2023 resulting in its closure for several weeks. The plant returned to full operation in June, but operating profit was affected because the insurance proceeds weren’t received in the period.
AVI said I&J experienced inconsistent catch rates in its financial year to end-June and rising diesel prices led to higher operating costs. Fishing businesses are subject to seasonality and catch rates vary based on quotas. Abalone exports increased after the lifting of lockdown restrictions in China and Hong Kong from January 2023, it added without giving further details.
Companies’ trading updates and financial statements continue to highlight the effects of Eskom’s rotational power cuts on their businesses and the economy. Pick n Pay reported a half-year loss this week, in part due to power costs, while Shoprite said spent R1.3bn on diesel in its most recent financial year that cut into profit.
Still, AVI said its branded consumer business, excluding I&J, saw operating profit for the year ended June 30 increase by 12.7%. Including I&J, the year-on-year increase was 6.9%.
Besides various biscuits, coffee and crisps, the group’s brands include the Coty fragrance licence, Spitz shoes and Lacoste clothing.
Group revenue rose to R14.9bn thanks to higher prices offsetting increased input and commodity costs. Food producers walk a fine line between increasing their prices and consumers responding with fewer purchases. Still AVI’s sales volumes increased in the second half despite price increases, and operating profit in the period improved by 14.5%.
AVI gross profit margins rose from a year earlier, in part due to it buying the fragrance trademarks from Coty, a strong performance from biscuit brands and improved profitability at the footwear and apparel divisions.
However, costs and administrative expenses increased at rates above inflation, thanks to substantially higher fuel prices, increased marketing spend and one-off insurance proceeds recognised last year.
AVI said intensifying load-shedding hammered the manufacturing, distribution and retail operations and supply chains, costing it R58.5m.
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