Consumer goods group AVI has reported a 10.2% rise in profit for the first half of the financial year, despite ongoing pressure from a constrained consumer environment, supply chain disruptions and global inflationary challenges.
Attributable profit rose to R1.36bn for the six months ended December from R1.24bn previously, while operating profit was up 8.9% at R1.96bn.
AVI noted an improvement in margins underpinned by sound cost control, improved manufacturing efficiency, increased selling prices to recover rising input costs and operational leverage.
The group’s headline earnings per share (HEPS) rose 8.9% to 407.5c AVI declared an interim dividend of 220c per share, also up 8.9%.
Group revenue increased marginally by 1.1% to R8.47bn, as the company navigated a tough retail environment and operational headwinds in its food and fishing businesses.
In a statement on Monday, AVI acknowledged that its fashion retail portfolio faced significant challenges, including supplier issues and global supply chain constraints. Additionally, its I&J division was affected by weaker demand and lower selling prices for abalone and historically low catch rates.
However, the group’s strong cash generation and operational discipline underpinned a 34.2% return on capital employed.
AVI cautioned that though input cost inflation was easing with the notable exception of coffee, the competitive consumer environment and high selling prices would continue to weigh on sales volumes.
The group said it remained focused on cost management and efficiency projects, though benefits from those initiatives were expected to materialise only in the next financial year.
It said municipal infrastructure failures, including power and water supply issues, remained a concern, driving additional investment to safeguard operations.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.