Consumer goods company AVI expects earnings to rise as much as 10% at the halfway stage, supported by “sound growth” in its operating margin and operating profit over the prior year.
The group said in a statement on Tuesday that consolidated headline earnings per share (HEPS) for the six months to end-December 2024 were expected to increase by between 8% and 10% to a range of 404.2c-411.7c.
Group revenue for the period rose 1.1% to R8.47bn, with Entyce’s 8.1% revenue growth underpinned by price increases required to ameliorate significant input cost pressures. The food and beverage unit contributed R6.88bn to group revenue.
AVI’s brands include Five Roses, House of Coffees, Bakers, Lenthéric, Kurt Geiger, Spitz and Green Cross.
Snackworks’ revenue ended 1% lower at just more than R3bn off a strong year-earlier base, while I&J’s revenue grew 3.9% to R1.198bn with the benefit of selling price increases in the fishing business and a weaker exchange rate partially offset by lower fish sales volumes driven by a poorer catch mix and catch performance.
The abalone category was affected by lower selling prices and weaker demand in its main Asian markets.
Personal care revenue declined 6.1%, with growth in roll-on and colour cosmetics not sufficient to offset lower demand in the aerosol and fragrance categories.
The fashion retail brand portfolio had a challenging semester with supplier and global supply chain issues affecting sales, it said. Revenue in the footwear and apparel unit was down 7.3% year on year.
December retail sales fell short of a strong year-earlier performance and were affected by stock shortages in some key brands and styles.
The group’s consolidated gross profit margin improved, underpinned by sound cost control, improved manufacturing efficiency and increased selling prices to recover rising input costs, AVI said.
Selling and administrative expenses were tightly controlled and ended in line with last year, which, together with the improved gross profit, supported a sound growth in the group’s operating margin and operating profit over the prior year.
Net finance costs were marginally higher due to increased average borrowing levels after the payment of the special dividend, partially offset by lower interest rates.
Capital gains increased because of the disposal of the assets and business conducted by I&J’s Umsobomvu joint venture with effect from July 2024. This transaction resulted in a capital gain of R12.6m after tax.
AVI, which is valued at R35.5bn on the JSE, expects to release its interim results on March 10.
Its shares were up 2.4% at R104.50 in early trade.
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