Libstar gets boost from technology investments
The group says it is benefiting from the standardisation of software amid hefty investments in new capacity
Consumer goods group Libstar says it is already reaping the benefits from new investments in capacity at its production facilities and in standardising group software, helping to boost profit in its year to end-December by a quarter.
The group, whose brands include Lancewood cheeses and Denny mushrooms, has invested or begun investing R401m in capacity-enhancing projects during the year, exceeding its guidance.
This includes standardising group software, which has already resulted in improved profit margins, the group said. The group has also invested R122m at Lancewood, of which R73m has been earmarked to upgrade the milk-receiving area, distribution centre and certain hard cheese packing lines.
Investments in 2020 are expected to fall towards the upper end of its guidance of 2% to 3% of revenue, it said, as the group seeks to “bed down” existing projects.
The group reported a profit for the year of R279.6m, a 25.4% increase from the prior comparative period. Profit margins held firm or improved across its categories.
Normalised operating profit - which excludes the effects of accounting changes - increased 3.8%, with the group saying margins improved to 8.6%, from 8.5% previously.
“Lower dry-condiment input costs, favourable sales mix changes in dairy, value-added groceries, baking products and baking aids, as well as the group’s continued focus on procurement practices, production efficiencies and overall equipment effectiveness, contributed to the improved margin result,” the group said.
The group said its net interest expenses, excluding accounting changes, declined 30.7% to R153.7m, as a result of a R700m reduction in net debt following its JSE listing in May 2018.
In morning trade on Wednesday, Libstar was down 2.26% to R6.50, having fallen about 23% over the past 12 months.
Update March 18 2020
This article has been updated with share price information.