JSE-listed fast-moving consumer goods holding company Libstar managed to grow its revenue from its retail and wholesale business segment by 10.7% during the six months ended June 30.
The company’s businesses in this segment were able to operate for the entire duration of the national lockdown in South Africa and contributed to an overall revenue growth of 1.9% for the company in the six months under review.
The robust retail demand helped to offset a revenue decline of 34.5% in the company’s food service channel, which had reduced demand owing to the quick-service restaurant sector being shut down during the hard lockdown.
Libstar’s exports segment suffered a revenue decline of 8% in the six months under review, owing to operational delays at the Cape Town port during June. These operational delays erased revenue gains in the first quarter of the year.
The company says additional port crew resourcing has helped to improve shipment completion rates at the port since the end of June.
While demand for retail wet condiments remained subdued for most of the first half of the year, orders have started to increase from the start of the second half of the year, says Libstar.
The company explains that demand for wet condiments in the retail and food service markets reduced significantly during the hard lockdown, with revenue down 2.8% year-on-year for the six months under review.
Meanwhile, Libstar’s cost of operation had increased significantly as a result of direct extraordinary Covid-19-related expenses of R44-million. This included donations of R3.5-million to needy communities, personnel-related benefits of R18.5-million and R22-million in direct operating expenses.
Therefore, the company expects to report normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) of between R449-million and R464-million for the six months under review, compared with normalised Ebitda of R482-million reported in the six months ended June 30, 2019.
If the extraordinary expenses are excluded, Libstar says its Ebitda would have increased by 2.5% year-on-year, instead of declining by between 3.9% and 6.9% year-on-year.
The company expects to report normalised earnings a share from continuing operations of between 23.1c and 24.5c apiece, which is about 20% lower year-on-year.
Libstar concludes that during July, the trading performance in the retail and export channel demand was strong, with a marked improvement in export shipment completion rates.
The demand for food service and industrial/contract manufacturing channel products strengthened compared with the first half of the year, although the recovery to pre-Covid levels of performance is expected to materialise over a longer period.
The company will publish its results on September 2.