Shares in Denny owner Libstar jump on maiden dividend
Libstar, the consumer goods group that listed on the JSE in May 2018, announced a maiden cash dividend of 22c a share on Wednesday as profits after tax in 2018 edged 1% higher to R236m.
The company’s shares were up as much as 9.7% at R7.79 in mid-morning trade.
The group, whose brands include Lancewood cheeses and Denny mushrooms, said the trading environment in the year ended December was “the toughest Libstar has experienced since its inception 14 years ago ... The retail sector is experiencing structural pressures brought about by economic uncertainty and lower levels of consumer spending”.
The group “performed satisfactorily”, with volume growth accelerating slightly in the second half of the year.
Revenues increased 12.5% to R9.9bn, thanks to acquisitions and the launch of Lancewood-branded dairy products.
Libstar said the local economy is expected to remain “sluggish” for the foreseeable future, “with a particularly difficult first half expected”.
Food inflation is likely to be between 0% and 2%, meaning growth will depend on volumes.
“The group aims, with product innovation, to grow its market share and the overall size of the market in terms of new products and new utilisation of products.”
Libstar aims to increase its penetration of independent retailers, wholesalers and exports. It will also invest further in plants and equipment, “and on specific earnings-enhancing capital projects” to boost output.
Its projects include the construction of a new tea plant for the local and export markets; a new Pringles plant to manufacture the snack for a third party; the expansion of its prepared-meal operations “to further tap into the growing convenience market”; and a new soft-cheese, value-adding and packing facility.
Independent analyst Anthony Clark said Libstar’s results were not as weak as expected, saying that on a 12- to 18-month outlook, Libstar is now “my cheapest buy in the sector”.