Libstar sheds 11% after drop in earnings
DURBAN - Libstar Holdings' share price slid by more than 11percent yesterday after the consumer packaged goods company reported an 18percent drop in its interim earnings as the Covid-19 lockdown led to the closure of hospitality venues, restaurants and quick-service restaurants, hurting the performance of its food products.
The share price declined to an intraday low of R6.22 before closing the day at R6.25.
Libstar, the owner of brands such as Lancewood, Denny Mushrooms and Finlar fine foods, said its normalised headline earnings per share from continuing operations for the six months to end June decreased by 17.7percent to 24.2cents a share while normalised earnings per share from continuing operations decreased by 19percent to 23.8c.
The group’s product portfolio consists of more than 9000 products and 91percent of its revenue is generated from food.
The group's perishables category, its single largest contributor to revenue, was severely impacted by the effects of Covid-19 as its revenue decreased by 1.7percent and volumes declined by 4percent.
In the groceries segment, revenue fell by 2.1percent but the category also benefited from a strong increase in revenue from the sale of pasta, meal ingredients, vinegar, honey, private label and branded sauces and soups in the retail channel.
However, the snacks and confectionery segment increased its revenue by 18.1percent to R283m, but the segment contributes only 6percent to group revenue.
Its revenue increased by 1.9percent to R4.71billion and normalised earnings before interest, tax, depreciation and amortisation declined by 5.4percent to R456.95m, while cash generated from operating activities increased by 26.40percent to R225m.
Libstar declared an interim dividend of 25c a share, in light of the stable cash flows delivered by the group during the reporting period.
Libstar chief executive Andries van Rensburg said in this difficult trading period the group had continued to work in pursuit of the protection, safety, health and well-being of its people, the preservation of cash and maintenance of the group’s financial stability.
“We will continue to capitalise on existing and new growth opportunities, enabled by our well-diversified portfolio of brand solutions, manufacturing capabilities and category growth plans,” Van Rensburg said.
Looking ahead, he said that food categories would remain at the heart of its growth strategy and the firm was well-positioned to capitalise on key consumer trends and changing consumer lifestyles.