A WEE DRAM
CHRIS GILMOUR: Management has turned tea, biscuits and fish into a tasty combination at AVI
At the heart of CEO Simon Crutchley’s business approach: ‘if you can’t get the volumes, then you have to protect the margin’
Way back in 2008, Tiger Brands mounted two unsuccessful hostile bids for food, fashion and beverage brand group AVI. These efforts were brushed aside by AVI management, which claimed they were not in the interests of shareholders. And management was right. In the ensuing nine years, the Tiger Brands share price has risen 2.65 times, while the AVI share price has risen 6.4 times, with a number of recent special dividends further cementing the shareholder relationship. For the year ended June 2017, AVI turned in a solid performance. Costs were well controlled and cash generation was healthy. Gross profit margin has held steady for several years, averaging 44%, helped by a consistent rand hedging philosophy that provides stability to manage margins. At the heart of CEO Simon Crutchley’s business approach is the proposition that "if you can’t get the volumes, then you have to protect the margin".
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