Ahead of its full-year results release on March 17, JSE-listed food and beverage producer Libstar Group has advised that its revenue declined by an average 2.8% for the year ended December 31, 2020.
The revenue decline was driven by a 23.8% year-on-year decline in the company’s food service segment, followed by a 0.9% decline in its industrial and contract manufacturing segment.
Revenue growth in the year under review was supported by a 12.3% revenue growth year-on-year in the retail and wholesale segment, while exports recorded a 6% year-on-year increase in revenue.
Libstar says the financial year was characterised by significant supply chain disruptions and changes in shopping behaviour, which were directly related to the Covid-19 pandemic.
The retail and wholesale segment’s contribution to group revenue increased to 64.4% in the year under review, compared with a contribution of 59.4% in the year ended December 31, 2019.
The company attributed revenue growth in this segment to continued robust retail demand and the beneficial timing effects of the sale of imported value-added meal ingredients in July, after major port delays in June.
These timing benefits were not repeated during the fourth quarter, as peak retailer demand during the festive season was largely satisfied by Libstar’s third-quarter deliveries.
The food service segment’s contribution to group revenue decreased from 18.3% in the prior year to 13.5% in the year under review.
The segment continued to trade at between 80% and 85% of prior year levels during the fourth quarter of 2020, owing to reduced occupancies of hospitality venues and restaurants in the wake of the pandemic.
Libstar says its Cape Herb & Spice business led the group’s export segment efforts, with a focus on dry condiments in the groceries category.
The performance was bolstered by continued demand for exported private label dry condiments, as well as substantially improved shipment fulfilment rates from July onwards following harbour congestion experienced in the second quarter.
In terms of industrial and contract manufacturing, the company says fourth-quarter revenues were adversely impacted on by reduced demand from national and multinational brand owners owing to the slowdown in food service markets.
Revenue growth in the second half of the year of 3.6% exceeded the 1.9% growth in revenue during the first half of the year, resulting in a 2.8% revenue growth for the full-year.