Libstar shares on the rise despite Covid-19 setback
DURBAN – The share price of JSE-listed Libstar Holdings, the owner of brands such as Lancewood, Denny Mushrooms and Finlar fine foods, rose more than 12 percent at one stage on Wednesday, despite taking a Covid-19-related hit in the nine months ending on October 2.
The share later closed 4.62 percent higher at R6.80.
The consumer packaged goods company said in a trading update that it incurred R60 million direct Covid-19 expense during the period and it anticipated a further R5m knock in the last three months to end December.
Its revenue increased by 6.2 percent for the nine months, while year-on-year revenue growth for the third quarter accelerated to 14.4 percent, mainly due to strong retail channel performance across multiple categories, increased food service sales and improved export shipment completion rates. The group said this performance came after reporting a 9.7 percent increase in revenue in the first quarter, following a decline of 4.9 percent in the second quarter.
Libstar reported a 15.5 percent total revenue growth in its retail and wholesale channel in the nine-month period, boosted by a 26.6 percent increase in the third quarter.
“The third quarter revenue growth was mainly attributable to continued robust retail demand, driven by increased at-home consumption.
"In addition, channel revenue benefited from a timing impact, as orders for imported value-added meal ingredients were completed in July after significant port delays in June,” the group said.
Its food service segment reflected the tough trading conditions as it reported a 13.6 percent decline in revenue during the third quarter compared to last year. However, Libstar said this was a significant improvement compared to the 63.2 percent year-on-year decline in the second quarter, and this was in line with the guidance previously provided to the market.
“The group expects trading at 80 to 85 percent of prior year levels for the remainder of the financial year, as the quick-service restaurant and other hospitality industries slowly recover from the impact of Covid-19 lockdown restrictions,” Libstar said
In the exports segment, its Cape Herb & Spice lead the group’s export volumes, with solid growth in the retail sector.
The export channel recovered strongly from the start of the second half by recording revenue growth of 13.1 percent during the third quarter.
Its revenue grew by 2.6 percent for the nine months ending on October 2.
Looking ahead, Libstar said the fourth quarter traditionally contributes significantly to its full-year profitability.
“In this regard, the group remains cautious as the full impact of Covid-19, particularly in relation to consumer spending trends, remains unquantifiable. However, Libstar continues to execute its key strategic priorities and remains well placed to meet customer needs in the rapidly changing consumer environment,” the group said.