Consumer goods company Libstar Holdings has reported higher earnings and boosted shareholder returns after it delivered a “materially improved” set of annual results reflecting continued progress in executing its strategy.
Libstar, whose brands include Lancewood, Denny Mushrooms, Cape Herb & Spice and Montagu Foods, reported an 8.2% increase in revenue to R12.3bn for the year ended December.
Normalised earnings before interest, tax, depreciation and amortisation rose to R1.07bn from R1.0bn a year ago.
Normalised headline earnings per share grew by 21.7% to 70.6c and the dividend was increased to 28c per share from 15c the year before. Basic HEPS were up 22.7% at 54.5c
“Momentum achieved in the first half of the year was sustained through the remainder of the reporting period, supported by continued operational discipline, portfolio optimisation and improved channel execution,” it said.
While retail market conditions remained subdued during the reporting period, Libstar maintained and expanded market share, particularly in Dairy, Wet Condiments, and Dry Condiments, it said.
Libstar said it will continue to allocate capital toward efficiency-enhancing projects within the Dairy, Wet Condiments and Dry Condiments subcategories, aimed at improving capacity utilisation, cost competitiveness and margin resilience
Gross profit margins improved through:
- disciplined raw material procurement;
- enhanced capacity utilisation;
- strategic pricing; and
- rigorous cost management.
It launched new ambient Food Service channel products and extended own-brand and private label ranges in the Retail and Wholesale channel.
The Ambient Products category delivered revenue growth of 7.4%, and the Perishable Products grew revenue by 9.2%,
Earlier this month Libstar said that after a comprehensive assessment of the non-binding expressions of interest it had received from interested parties regarding the potential acquisition of all Libstar shares, the board had decided not to progress engagements.
The expressions of interest received were not reflective of the fair value of Libstar, the board said.
Libstar said it expects to continue making steady progress against its Simplification, Growth and Sustainability strategy, supported by improved operational discipline and a strengthened balance sheet.
With net debt to Ebitda at the lower end of its target range, the group has resolved to utilise this balance sheet optionality to enhance stakeholder value creation. It will adjust its dividend policy from a normalised HEPS cover of between 3.0x and 4.0x to between 2.0x and 3.0x. It also intends to implement a general share repurchase programme of up to 5% of shares in issue, subject to prevailing market conditions.
Libstar said it will continue to allocate capital toward efficiency-enhancing projects within the Dairy, Wet Condiments and Dry Condiments subcategories, aimed at improving capacity utilisation, cost competitiveness and margin resilience.
The integration of Dickon Hall Foods into Montagu Foods, scheduled for completion during the second quarter, will result in temporary plant downtime and associated transitional costs. As a consequence, the group anticipates that earnings performance for the year will be weighted more heavily toward the second half than in prior periods.
“The group, however, remains confident in the growth and sustainability outcomes from this important capital project,” it said.
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