Perhaps Libstar should not have gone public, as some commentators have said. Certainly, the consumer packaged-foods group that owns brands such as Lancewood cheese and Denny mushrooms and makes ready-meals for Woolworths, was mispriced when its sponsors took it to market at R12.50 a share, in the process raising R3bn, half of that to pay down debt.
But at least investors now have a maiden set of numbers with which to work – which may have been one of the reasons the company had a positive day on the JSE on Tuesday, while most other SA Inc stocks fell in a heap. While operating profit fell almost 14% to R223m, and that partly due to foreign exchange losses, Libstar has been able to drive through positive growth in volumes, as well as an increase in organic sales. It will need to make good on its margin promises though. Its gross profit margin fell to just under 21%, partly due to lower mushroom prices. But the company says price increases it has passed on to customers, as well ...
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