AVI declares special dividend

Consumer goods group AVI has reported a 24% rise in annual headline earnings and has declared a special dividend.

The group delivered a “pleasing performance in a challenging environment,” it said in a statement on Monday.

Revenue for the year to end-June increased by 6.3% to R15.86bn, underpinned by selling price increases to offset cost pressures and volume growth in the beverage categories. Profit for the year grew to R2.26bn from R1.84bn.

Headline earnings per share (HEPS) were up 24.1% to 687.1c. The group declared a final dividend of 388c per share, making a total dividend of 590c, up 22.4% on the previous year. It also declared a special dividend of 280c per share.

The group said the performance was achieved against the backdrop of constrained consumer demand, increasing competition in all categories, unreliable municipal infrastructure that affected manufacturing sites, a weaker rand and rising raw material costs.

Poor catch rates and constrained abalone markets affected fishing unit I&J.

The group said that the direct cost of load-shedding in the period amounted to R33.2m.

Gross margins had recovered to pre-Covid levels, it said. AVI spent R476.5m on capacity and efficiency projects.

AVI, whose brands include Bakers biscuits and Five Roses tea, said in a statement ahead of the release of its results that the management of selling price increases, strong cost control, the benefits of investments in improving the efficiency of production facilities and hedging supported good operating leverage and underpinned the operating profit growth for the year.

Operating profit was up 21.7% at R3.3bn.

AVI reported previously that Entyce delivered strong growth supported by a combination of higher selling prices, improved sales volumes across all its categories and operational leverage. Creamer performed particularly well, gaining market share and benefiting from additional production efficiencies after a substantial investment in the facility as well as competitor supply disruptions, AVI said.

Snackworks growth slowed through the second half with volumes across the biscuit and snacks portfolios ending lower. Margins were effectively managed and supported by improvements in factory efficiencies and an improved sales mix in the snack brands.

Fishing revenues improved to the end of the second semester with better catch rates compared with the first half, benefits from a weaker rand and higher selling prices.

Indigo’s personal care profit declined marginally on 2023’s profit due to the cessation of the Coty distribution agreement from July 2023. Indigo’s owned brands performed well, with improved margins supported by efficiencies from range rationalisation initiatives and the loss of the lower margin Coty business.

The footwear and apparel brands had a challenging second semester with constrained demand worsened by increased discounting in the sector, particularly in apparel. Core footwear brands performed well, AVI said.

mackenziej@arena.africa