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Libstar delivers strong performance during second half of 2023 financial year

Libstar today announced that its trading performance and cash generation significantly improved during the second half of the 2023 financial year which was aided by the initial implementation of a comprehensive new strategic direction.
  • Group revenue grew by 5.2% over the year after accelerated growth of 6.2% in the second half.
  • Gross profit margin recovered in H2 2023 to 21.4%, compared to the 20.0% reported in H1 2023 and 19.6% reported in H2 2022.
  • Cash generated from operating activities increased by R23.8 million from R731.0 million to R754.8 million.
  • Load-shedding added R77 million direct operating costs (2022: R39 million).
  • Total Diluted earnings per share (EPS) increased to 38.0 cps from a loss of 0.9 cps in 2022.
  • Total Diluted headline earnings per share (HEPS) increased by 6.0% to 47.7 cps (2022: 45.0 cps).
  • Cash dividend of 15 cents per ordinary share (gross) declared.

Libstar Holdings Ltd (JSE: LBR) today announced that its trading performance and cash generation significantly improved during the second half of the 2023 financial year which was aided by the initial implementation of a comprehensive new strategic direction.

The new strategy focuses on simplifying the Group and improving its cost competitiveness, earnings quality and return on invested capital (ROIC).

Market conditions remained challenging during the 2023 financial period, with muted customer demand, elevated manufacturing input cost inflation and direct and indirect impacts of load-shedding and port congestion.

Libstar conducted a comprehensive strategic review of its portfolio composition, operating model as well as its category and channel participation in H1 2023. The objective of the review was to identify key value-driving initiatives (KVIs) to deliver accelerated, profitable growth and stakeholder returns.

“We are pleased with the early benefits of the new strategic direction during the second half that assisted in a strong improvement in results. Our actions during the last six months included improved capacity utilisation, production efficiencies, pricing and cost management and focused capital allocation,”

Charl de Villiers, CEO of Libstar.

He added; “We have a clear action plan in place, with targets to ensure delivery. Progress has been made with our strategy to exit the Household & Personal Care segment as we refocus our portfolio towards value added food products. We have also progressed with the functional and operational consolidations of divisions and product lines to transform our operating model from a multiple division-based structure to a category-based structure comprising two super-categories: Perishables products and Ambient products.”

Market conditions are expected to remain challenging in 2024 as the weak macro-economic climate continues to adversely impact consumer demand. Whilst the Group’s revenue growth moderated during the first eight weeks of the 2024 financial year, the margin improvements achieved in the second half have been sustained. Although increased competitor participation in the food service channel is expected to result in further Perishables category revenue growth moderation, gross profit margins will benefit as the product mix improves toward higher-margin value-added meat products.

“Our key objectives are to deliver a sustained improvement in margins through the execution of our strategic interventions, retain a focused capital allocation approach and further strengthen our balance sheet whilst considering share repurchases at attractive valuations. We are confident that our simplified portfolio composition and operating model will drive an improvement in cost competitiveness, earnings quality and ROIC,” concludes de Villiers.

Libstar’s 2023 Annual Results can be found here >

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