Brian Joffe. Picture: MARTIN RHODES
Brian Joffe. Picture: MARTIN RHODES

Brian Joffe’s Long4Life says half-year earnings will probably fall partly because of lower trading profits from Chill Beverages, which makes the Fitch & Leedes drinks brand.

Joffe, the Bidvest founder who also started and heads Long4Life, said at the group’s AGM on Tuesday that Chill Beverages had been “the area of disappointment” in recent months as new investments in the business were not yet being matched by sales.

While revenue had increased year on year, “underutilised capacity together with the increased expenditure has resulted in a decline in the trading profit of the business”, Joffe said.

The group, whose brands also include Sportsmans Warehouse and the Sorbet beauty and grooming chain, expected “reasonable results” for the six months to end-August, he said.

But while revenue was up, headline earnings per share would fall because of Chill Beverages’ underperformance, new accounting rules and share-based payments. The decline was despite Long4Life’s ongoing share-repurchase programme.

“As has been exhaustively narrated, our operating environment is exposed to, and continues to feel the pressures of, the constrained economy,” Joffe said.

He said the sports and recreation division, as well as the personal care and wellness unit, was performing in line with expectations.

Joffe said recent investments in Chill Beverages, partly aimed at exports, “will deliver benefit for shareholders over the medium term”.

“We anticipate buoyant sales in the summer season ahead and that the increased capacity should satisfy expected demand.”

The group has struggled to finalise acquisitions, having walked away from a R3.9bn takeover of Rage a year ago after analysts said the shoe group was overvalued.

But Joffe said “the current uncertain environment offers opportunities of finding value investments in our space”.

Long4Life plans to report its interim results on October 24.

The group’s shares were 0.5% down at R3.98 on Tuesday morning.

hedleyn@businesslive.co.za