DURBAN – JSE-listed fast-moving consumer goods company AVI saw its share price declining by more than 9percent after it released a weak trading update for the six months to end December with consumers under pressure in a weak economy. AVI has an extensive portfolio of more than 50 brands, which includes Five Roses, Bakers, Freshpak and House of Coffees.

It also holds the licence for international brands such as Rimmel, Kurt Geiger, Yardley and Lavazza.

In the update released on Friday, AVI said it expected its earnings per share (Eps) to show a decline of between 6.5 and 7.5 percent as compared to last year.

The group is expecting to report Eps of 302cents a share and 305c, down from last year’s Eps of 326.2c.

However, the group said its revenue would increase by 0.2percent, as a result of a weak trading environment with continued pressure on consumer spending resulting in sales volume weakness in many of its businesses. This was exacerbated by competitor discounting in some categories.

“In particular December's sales volumes were lower than last year, including in Spitz, which was unable to repeat last year’s record December sales volumes,” the group said.

In addition, its half-year results were also impacted by provisions for the significant restructuring at Green Cross, and an unfavourable movement in the mark-to-market adjustment on I&J’s fuel hedges resulting from the low oil price at the end of the period.

The share price declined to R95.02 a share on Friday morning, before closing at R95.45 at the end of the day.

In an effort to lessen the weak environment, the company increased selling prices in selected categories where there was a need to improve accumulated cost pressures.

Despite the challenges the group faced during the period, it said gross profit margins were well protected, reflecting generally low raw material cost inflation and good cost control.

“Despite tight management of selling and administrative costs, operating profit was lower than for the first semester of last financial year, mainly due to the impact of the lower volumes. Cash flows remained strong through the semester,” the group said.

It also expected its headline earnings per share (Heps) to decrease by between 6 and 7percent compared to last year. The group will report Heps of between 303c and 306c, down from last year’s Heps of 325.6c.

AVI will release its half-year results on or about March 11.

BUSINESS REPORT