Libstar reports profit dip amid Covid-19
The pandemic had a mixed effect on the group, boosting some sales, though it faced Covid-19-related costs
Libstar, the owner of Denny mushrooms and Lancewood cheese, reported a slight decrease in half-year profits after Covid-19 boosted demand for some of its food products, while hitting the restaurant industry and resulting in additional costs.
Headline earnings to end-June fell 9.1% to R101.3m, with the group facing R44m in Covid-19 costs, including personnel-benefits and costs of protective equipment.
Normalised headline earnings per share from continuing operations, which excludes non-trading items, and the group says better reflects its underlying performance, fell 17.7% to 24.2c.
South Africans cooked at home more during the group’s half year to end-June, resulting in 10.7% growth for the group’s retail and wholesale division, which includes products such as baking aids.
These products generate more than two thirds of the group’s revenue.
Revenue for the group’s food service division, which provides beef, chicken, tortilla wraps and other products, fell 34%. This division contributes 12% to group revenue.
Libstar said given its diversified product mix, it was well positioned to capitalise on consumer trends.
“The group has not wavered from its strategy of pursuing product and production growth, continuing to invest in expansionary and replacement capital expenditure, albeit at a lower rate than 2019,” the statement read.