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Libstar shows solid growth, continues strategic shift to focus on food-only business
Libstar Holdings has revealed its financial results for the six-month period ended 30 June 2024, noting continued progress in executing its simplification, growth, and sustainability initiatives as per the Group’s new strategic direction that was introduced in 2023.
Image supplied
Despite the challenging market landscape, intensified by adverse economic conditions, the Group recorded revenue growth of 5.2% for the first half of 2024, driven by the strong performance of the Ambient Products category, which grew revenue by 9.1%.
The Group’s gross profit margin increased to 21.5% (H1 2023: 21.2%) due to effective price realisation, cost management, improved product basket mix and production efficiencies.
Cash generated from operations increased from R279.3m to R281.4m.
“We are pleased with the Group’s progress as we continue to implement our new strategic direction and remain committed to delivering further tangible positive outcomes during the traditionally more profitable second half of the year,” said Charl de Villiers, chief executive officer of Libstar.
Performance by category
Volume sales for the Ambient Products category (which contributes 48% of Group revenue) increased by 1.6% and price/mix increased by 7.5%.
This result was driven by a strong performance of the Group’s retail wet condiment offerings and the recovery of wet condiment volumes of 32.3% in the industrial channel relative to the weak demand in the comparative period.
The revenue for the Perishable Products category (which contributes 47% of Group revenue) increased by 2.0%, of which 4.2% was due to positive price/mix changes. Volumes declined by 2.2%, driven by lower beef volumes in the food service channel.
Revenue from the Household and Personal Care category (which contributes 5% of Group revenue) increased by 1.3%, while volumes declined by 0.9% and price/mix increased by 2.2%.
Performance by sales channel
The retail and wholesale channel revenue contribution increased slightly to 59.2% (H1 2023: 58.3%) of Group revenue, whilst the food service channel revenue contribution decreased to 18.7% (H1 2023: 20.8%) of Group revenue.
Following the reporting period, the Group has entered into a sale agreement to dispose of its Chet Chemicals business unit, marking tangible progress in Libstar’s efforts to reduce its exposure to non-food categories.
The Group will continue to explore strategic options related to its only remaining non-food business, Contactim.
Libstar also resolved to exit its current beverage manufacturing operations by closing the Franschhoek-based Chamonix Spring Water plant effective 31 August 2024.
The Group is on track to finalise the simplification of its operating structures within the newly established Perishables Products (previously Perishables) and Ambient Products (previously Groceries, Baking & Baking Aids and Snacks & Confectionery) super-categories by the end of 2024.
Household & Personal Care remains as a third category while Libstar’s efforts to reduce its exposure to non-food categories continues.
Charl de Villiers, chief executive officer of Libstar. Image supplied
“Our Group’s category-led strategy and organisation structure are designed to leverage its strengths and resources to maximise efficiency, responsiveness and growth potential. By organising around specific product categories, Libstar can better meet the needs of its customers, consumers, drive innovation and cost savings, and achieve its strategic objectives,” added de Villiers.
Focused on delivering sustainable profitable growth
Looking forward, in the Ambient Products category, the Group will remain focused on executing on its strong pipeline of export orders and growing its food service product range both locally and internationally.
In the Perishable Products category, Libstar will continue to drive operational efficiencies and market opportunities within its integrated operating model in the second half of 2024.
De Villiers concluded, “Our top priority for the rest of the year is to maintain superior service levels and drive cost efficiencies through strategic initiatives, ensuring sustainable improvements in both operational performance and margins.”
Libstar’s 2024 Interim Results can be found here.
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