AVI Limited Reports Resilient Performance Amidst Trading Challenges

  • Resilient Performance: AVI Limited reported a robust 7.1% increase in segmental revenue despite challenges like port inefficiencies.
  • Operational Highlights: Entyce Beverages and Snackworks demonstrated sound profit growth, while I&J faced challenges due to port inefficiencies.
  • Earnings Outlook: AVI anticipates a 16.0% to 18.0% increase in consolidated earnings per share for the six months ending December 2023.
By Lethabo Ntsoane

AVI Limited, a leading South African company, has announced a commendable performance in a challenging trading environment for the six months ending December 31, 2023. The company faced obstacles such as port inefficiencies and persistent load-shedding across its sites, impacting supply chains and operational costs.

Segmental Revenue Growth

AVI Limited’s segmental revenue for the period showed a robust 7.1% increase compared to the same period in 2022. Here is a breakdown of the segmental revenue:

SegmentRevenue (Rm)Change (%)
Food & Beverage Brands6,674.78.9
Entyce Beverages2,420.216.0
Snackworks3,101.19.8
I&J1,153.4(5.1)
Fashion Brands1,703.40.5
Personal Care539.3(11.7)
Footwear & Apparel1,164.17.3
Group8,378.17.1

Business Highlights

  • Entyce Beverages: Despite facing input cost pressures, Entyce Beverages achieved increased sales volumes in key categories and improved factory efficiencies, supporting sound operating profit growth.
  • Snackworks: Recovering from material input cost pressures, Snackworks demonstrated sound operating profit growth for both the biscuit and snacking categories, driven by improved gross margins and cost control.
  • Indigo Brands: Despite the loss of the Coty business from July 2023, Indigo Brands saw improved operating profit, with growth in the aerosol, fragrance, and roll-on categories.
  • SPITZ’s Footwear and Apparel: SPITZ experienced a strong December with higher demand for core brands, particularly in footwear. However, demand for apparel faced constraints throughout the semester.
  • I&J (Irvin & Johnson): I&J encountered challenges, including a 17.1% decline in fish sales volumes due to poor catch rates, aggressive competition, and port inefficiencies. A non-cash cost of R14.9 million was recognized for the new BBBEE structure implemented in July 2023.

Financial Overview

  • Net Finance Costs: Increased in line with higher interest rates but partially offset by lower debt levels, remaining within the target range.
  • Taxation: The effective tax rate is largely in line with the corporate tax rate of 27%.

Earnings Outlook

AVI Limited provided an outlook for the six months ending December 2023:

  • Consolidated Headline Earnings per Share: Expected to increase by 16.0% to 18.0% over the prior year, ranging between 369.9 and 376.3 cents per share.
  • Consolidated Earnings per Share: Expected to increase by 16.0% to 18.0% over the prior year, ranging between 369.3 and 375.7 cents per share.

Future Release

AVI Limited is anticipated to release its full results for the six months ending December 2023 on or about March 4, 2024.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo