LIBSTAR Holdings is on track to finalise the simplification of its operating structures in the new perishable products and ambient products super-categories, by the end of 2024.
The food company said in a pre-close trading update yesterday, for trading during the year to May 24, that its five value-driving initiatives to improve the group's cost-competitiveness, earnings quality and return on invested capital, remained fully in place.
The share price increased sharply by 6.2% to R3.95 yesterday afternoon on the JSE.
Category growth initiatives, launched during 2023, had yielded benefits as the dairy and wet condiment sub-categories performed strongly relative to the prior period.
Against a backdrop of subdued local consumer demand, Libstar’s export channel outperformed, benefiting from a renewed business development focus initiated in 2023.
Plans to reduce interest-bearing debt to a normalised earnings before interest,, tax depreciation and amortisation (Ebitda) ratio of below 1.5 were also on track, supported by focused capital allocation and sustained working capital monitoring.
Libstar’s year to date revenue increased by 4.6%. Revenue growth was driven by price and mix changes of 6.3%, against a volume decline of 1.7%.
Perishable Products category revenue increased 4.4%, with selling price inflation and mix changes contributing 7.7% to sales growth. Sales volume fell 3.3% driven by lower beef volumes in the food service channel.
Ambient Products category revenue increased 5.3%, driven by a recovery of wet condiment volumes in the industrial channel against weak demand experienced in the prior period.
Dry condiments exports saw volume growth with a strong pipeline of orders to be delivered in coming months. Price and mix changes contributed 5.8% of revenue growth.
Gross profit margins were sustained above those of the first half due to effective price realisation, cost management, improved product basket mix and production efficiencies. Expenses remained well-controlled.
The portfolio and operating model simplification strategy had yielded initial results. Further benefits were expected from the HPC divestment strategy as well as an integrated Perishable Products operating model in the second half of 2024.
Within the Ambient Products category, Libstar further developed export opportunities and increased its food service channel product basket locally and internationally.
Improving customer service levels and cost efficiencies through targeted projects were a key priority to deliver improved operational performance and margins.
BUSINESS REPORT