Consumer brands and food group AVI used higher selling prices to limit the damage to its margins, as a “constrained spending environment” hit volumes in the year to end-June.

In results released on Monday, the group reported a 9.4% rise in full-year headline earnings per share (HEPS) to R5.08, which was in line with its recent guidance.

Revenue rose 8.2% to R13.18bn after it increased selling prices to counter the deferred effects of a weaker rand in the second half of the 2016 financial year.

AVI said rand hedges had deferred the effects of the weaker currency until the 2017 financial year, “with the result that last year’s profit margins were protected while we had opportunity to negotiate compensatory selling price increases that have carried into the current year”.

But raw material prices also rose in the 2017 year, and its cost of sales growth was faster than revenue growth, at 8.5%. The gross margin was 43.7%, little changed from 43.9% a year earlier.

After-tax profit of R1.55bn was up 4.9% from R1.48bn the year before. Headline earnings grew to R1.65bn from R1.49bn.

AVI operates in the fast-moving consumer goods market‚ competing with established players such as Pioneer Foods and Tiger Brands.

The company is also exposed to the competitive retail sector, through Spitz and other brands.

Through I&J‚ AVI operates a fishing business‚ which pits it against the likes of Sea Harvest and Premier Fishing‚ both of which listed earlier in 2017.

The I&J operation benefited from favourable exchange rates, but operating profit fell short of target thanks to a three-week unprotected strike at the trawling operations in the first half.

Capital expenditure fell sharply, to R545.6m, down 38% on the prior year, which included a R260m fleet outlay for I&J.

All of AVI’s underlying businesses, including Entyce Beverages and Snackworks, showed increases in both revenue and operating profit.

The other divisions are personal care, and footwear and apparel.

AVI said the trading environment was likely to remain challenging in the new financial year, with little chance of a meaningful improvement in consumer spending.

A final dividend of R2.43 per share was declared, taking the total to R4.05, which was up 9.5% on the year-earlier period.

AVI shares have risen 7% to R97.54 on the JSE so far in 2017, valuing the company at R34.2bn.

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