Cape Herb & Spice is a subsidiary of Libstar Holdings.
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Libstar Holdings saw materially improved results from its branded foods and consumer goods for the year to December 31 and this was reflected in the dividend rising 86% to 28 cents a share, an enhanced dividend policy, and a plan to buy back shares.
“With net debt to earnings before interest, tax, depreciation, and amortisation (EBITDA) at the lower end of the group's target range, the board has resolved to utilise this balance sheet optionality to enhance stakeholder value creation,” the CEO, Charl de Villiers, said in the results announcement.
Accordingly, dividend policy would be adjusted from a normalised headline earnings per share (HEPS) cover of between 3.0x and 4.0x to between 2.0x and 3.0x. It intended to also repurchase up to 5% of the shares in issue, subject to market conditions, he said.
In parallel, capital would continue to be allocated to efficiency-enhancing projects within the Dairy, Wet Condiments, and Dry Condiments food product units, aimed at improving capacity utilisation, cost competitiveness, and margin resilience.
The integration of Dickon Hall Foods into Montagu Foods, scheduled for completion during the second quarter, would result in temporary plant downtime and associated transitional costs.
As a result, earnings performance would likely be weighted more heavily toward the second half than in prior periods, said De Villiers.
“The group, however, remains confident in the growth and sustainability outcomes from this important capital project. Notwithstanding ongoing macroeconomic and consumer pressures, the board remains confident that continued execution of the strategy, combined with disciplined capital allocation, positions the group to deliver sustainable improvements in earnings quality, cash generation, and returns over the medium term.”
The strong annual results for the year to December 31 reflected continued progress on its simplification, growth, and sustainability strategy, De Villiers said.
Momentum achieved in the first half of the year was sustained in the second half, supported by operational discipline, portfolio optimisation, and improved channel execution.
Retail market conditions remained subdued during the reporting period, characterised by low volume growth and moderating inflation across key categories, with certain sub-categories experiencing deflation.
Highlights for Libstar through the year included maintaining and expanding market share, particularly in Dairy, Wet Condiments, and Dry Condiments, as well as improved gross profit margins through disciplined raw material procurement, enhanced capacity utilisation, strategic pricing, and cost management.
New ambient food service channel products were launched, and own-brand and private label ranges in the retail and wholesale channels were extended.
There was strong cash generation through working capital normalisation, including dairy and bulk tea inventory optimisation, along with tight capital allocation.
The Ambient Products category delivered revenue growth of 7.4% and normalised earnings before interest, tax, depreciation, and amortisation (EBITDA) growth of 3.1%.
The Perishable Products category delivered 9.2% revenue growth, improved gross profit, and normalised EBITDA growth of 12.5%.
Group revenue increased by 8.2% off volume growth of 3,2% and a 5% price mix benefit. The group's gross profit margin was 22% compared with 21.6% in 2024.
De Villiers said they expect to continue making steady progress against their simplification, growth, and sustainability strategy, supported by improved operational discipline and a strengthened balance sheet.
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