AVI anticipates only single-digit growth in 2021 headline earnings
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AVI, WHICH owns more than 50 consumer brands from frozen convenience foods to fashion accessories, said yesterday that it anticipated headline earnings a share to rise by between 5 and 7 percent for the year to June 30, from last year’s 470.8 cents a share.
The group said the net effect of the recent looting and violence in KwaZulu-Natal and Gauteng on the 2022 financial year was not expected to be significant, because strong replenishment demand suggested that retail densities would improve in unaffected stores.
Direct damage was limited to four Spitz stores where all of the stock was stolen and the fixtures were damaged. The stores were expected to resume trading in three to six weeks. None of the group’s other sites suffered damage.
Snackworks lost some raw material held in a third-party storage facility that suffered a total loss. The asset and trading losses were insured.
“Retail trading has now recovered to acceptable levels. However, it remains to be seen whether the lost July sales can be recovered.
“There is adequate stock on hand to support our traditional build-up in lay-bye sales ahead of December,” the group said.
According to the trading statement, AVI said revenue was expected to increase 0.5 percent for the year to June 30, mainly because of higher volumes at I&J in the second semester and price increases in most categories to offset cost pressures, primarily as a result of the weaker rand.
Apart from I&J, sales volumes were lower than last year, with the fashion brands impacted by a weak first semester, as consumer demand slowly improved after the initial hard lockdown period, while demand for food and beverage brands normalised from the peak demand in the fourth quarter of the last financial year.
Gross profit margins were protected through better cost management and promotional activity, as well as selling price increases where necessary.
Second-semester revenue from the fashion brands was 13.5 percent higher than in the second semester of last year, which had been adversely impacted by the hard lockdown restrictions. This offset much of the decline in volumes and revenue in Entyce and Snackworks, which had benefited from increased demand during the hard lockdown.
I&J’s fishing and abalone operations made a significant contribution to revenue and profit growth for the second semester and the full year.
Net finance costs for the year were materially lower in line with lower interest rates and average debt levels.
AVI planned to release its results for the year on or about September 6. Its share price closed 0.44 percent higher on the JSE yesterday at R73.32.