An AVI-owned Spitz store in the Rosebank Mall.Picture: Simphiwe Mbokazi An AVI-owned Spitz store in the Rosebank Mall.Picture: Simphiwe Mbokazi
Johannesburg – AVI, which is home to brands such as
I&J and Spitz, says rising raw materials and a weaker rand weighed on its interim
results in the six months to December.
The listed food and fashion company said in a statement
on Monday that, despite this, its operating profit gained 8.1 percent to R4.14
billion as revenue gained 11.6 percent to R7.13 billion.
Echoing other companies that have recently reported
results, it notes that it experienced a challenging environment.
AVI declared a 162c a share dividend, an 8 percent
year-on-year improvement.
It says its revenue growth reflects a combination of
price increases in response to a weaker rand exchange rate and higher raw
material costs, and volume growth in most of our grocery categories.
While gross profit gained 8 percent to R3.12 billion, its
consolidated gross profit margin dropped from 45.3 percent to 43.8 percent as
some categories have yet to fully recover the input cost pressures resulting from
the weaker rand exchange rate.
Its operating profit margin decreased from 20.4 percent
to 19.7 percent, which it says is in line with the pressure on gross profit
margins in some categories.
AVI notes Entyce and Snackworks both performed soundly
with good growth in operating profit for the semester notwithstanding that
selling prices have yet to fully recover rising input costs. The overall
performance by AVI’s Fashion Brands was satisfactory in the context of the difficult
consumer environment.
Read also: Price increases lift AVI revenue
Demand during December for its core brands was strong, with
Spitz in particular achieving solid revenue growth compared to December last
year, it adds. Both Spitz and Green Cross grew operating profit in the period despite
pressure on footwear sales volumes at the materially higher price points necessary
to protect gross profit margin. Indigo Brands delivered a “pleasing” result for
the semester with gains in market shares in key categories, it says.
I&J achieved profit growth from favourable exchange
rates and improved fishing in the second quarter, although the result was
tempered by an operating profit shortfall of about R25 million due to a three
week illegal strike at the trawling operations in August, it says. The
shortfall impacted negatively on the group’s trading result for the first half.
Headline earnings, a key measure of profitability, rose
8.5 percent to R979.8 million with the growth in operating profit and an
improved result from I&J’s Australian joint venture partially offset by
higher finance costs in line with higher interest rates.
Headline earnings per share increased 7.6 percent from
281.6 cents to 302.9 cents with a 0.8 percent increase in the weighted average number
of shares in issue due to the vesting of employee share options, including the
AVI Black Staff Empowerment Scheme, it says.
The company spent R284 million during the half year,
which was lower than in the first half of last year.
ONLINE