AVI expecting to grow half year profit despite port and power challenges

File photo of Spitz store.

File photo of Spitz store.

Published Jan 24, 2024


AVI’s consumer brands businesses faced ports and load shedding challenges, but would likely lift consolidated headline earnings per share by between 16-18% for the six months to December 31, 2023.

The group, which has brands in hot beverages, sweet and savoury biscuits, frozen convenience foods, personal care products, cosmetics, footwear, accessories and fashion apparel, said yesterday in an update that headline earnings per share would be between 369.9 and 376.3 cents, compared with 318.9 cents in the interim period a year before.

Food & Beverage Brands revenue increased 8.9% to R6.67 billion. Entyce Beverages increased revenue 16% to R2.42bn. Snackworks revenue was up 9.8% to R3.1bn. I&J’s revenue fell 5.1% to R1.15bn.

Fashion brands revenue was up 0.5% to R1.70bn, while revenue in the Personal Care division fell 11.7% to R539.3m. Footwear & Apparel increased 7.1% to R1.16bn. Group revenue was up 7.1% to R8.38bn.

Entyce Beverages did not fully recover input cost pressures, but increased sales volumes in key categories and improved factory efficiencies protected margins.

Snackworks recovered material input cost pressure, and this with factory efficiencies and cost control improved gross margins, resulting in sound operating profit growth for both the biscuit and snacking categories.

Indigo brands lifted operating profit with growth in the aerosol, fragrance, and roll-on categories despite the loss of the Coty business from July 2023.

Spitz's footwear and apparel business had a strong December. Spitz experienced constrained demand especially for apparel with the semester's operating profit only marginally ahead.

I&J fish sales volumes fell by 17.1% due to poor catch rates, aggressive competition both internationally and domestically and the loss of December's export sales due to inefficiencies at Cape Town port.

A non-cash cost of R14.9m was for the new BBBEE structure. I&J's operating profit was materially lower than the prior year.

Finance costs increased due to higher interest rates partly offset by lower debt, which remained within the group’s target range. There were no material capital items in the period.