Food producer and distributor Libstar will report a loss for the year to end-December due to “supplier diversification implemented by a major customer” that affected beef volumes in the group’s food service unit.
The move forced an impairment charge of R400m on the Finlar Fine Foods business, Libstar said in a trading statement on Friday.
The group thus expects to report a loss of 53c-55c a share compared with the prior year’s EPS of 38c. Headline earnings per share (HEPS) are expected to decline as much as 14.3% to 40.9c-43.3c.
Though the group received insurance proceeds of R120m in 2023 after a fire at the group’s Denny Mushrooms Shongweni plant, Libstar also recorded an impairment charge of R98.2m on Denny Mushrooms to “recognise the business unit at its recoverable value”.
The group further made a R10.5m impairment of the Ambient Products unit after “reassessing the carrying value of customer relationships”.
Excluding insurance proceeds, impairments and other nonrecurring costs, normalised earnings before interest, tax, depreciation and amortisation are expected to be flat year on year at R964.4m-R983.9m.
The company, which exports food products to more than 50 countries, said it had made strong progress on its simplification, growth and sustainability strategy, highlighting the improved performance of its Ambient Products category.
While that was tempered by the loss of production volumes in the food service division, “this challenge does not detract from the overall strategic progress and resilience demonstrated by the group”, said the firm.
Libstar is scheduled to publish its annual financial results on March 18.
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.