Libstar Holdings Limited has released its trading statement for the year ended December 31, 2023, showcasing resilient performance in the face of economic headwinds.
Revenue Growth and Volume Sales
Despite ongoing supply chain disruptions, load-shedding, and subdued consumer confidence due to high inflation and interest rates, Libstar’s revenue growth accelerated from 4.0% in the first half of 2023 to 5.8% for the full year. The second half of 2023 saw a revenue growth of 7.3%, driven by increased demand in retail and food service channels. However, volume sales declined by 2.7% in the second half of the year, contributing to a full-year decline of 4.8%.
Gross Profit Margin and Operating Expenses
Libstar attributed its improved performance to enhanced capacity utilization, production efficiencies, and effective cost management. Gross profit margins recovered in the second half of 2023, reaching 21.2%, compared to 20.0% in the first half. Despite challenges, operating expenses, excluding impairment charges, were contained to a below-inflationary 1.9% increase.
Financial Costs and Cash Generation
The company reported an increase in net finance costs on interest-bearing debt by 53.3%, mainly due to higher lending rates. However, focused capital allocation and improved cash generation allowed Libstar to reduce its net interest-bearing debt to Normalised EBITDA ratio from 2.1 times to 1.6 times, aligning with the optimal range of 1 to 2 times.
Insurance Proceeds and Impairments
Libstar received insurance proceeds of R120 million related to a fire incident at Denny Mushrooms Shongweni. Despite this, impairment charges of R73 million net of tax were recognized for reduced mushroom production and R43 million net of tax for the Khoisan Gourmet business unit due to weak international demand for bulk tea.
Earnings per Share (EPS)
The company expects total earnings per share (EPS) to be between 37.0 and 39.0 cents per share, a significant improvement from the prior year’s loss of 0.9 cents per share. Similarly, total headline earnings per share (HEPS) are projected to increase between 23.5% and 28.5%, ranging from 55.6 to 57.8 cents per share.
Normalised Earnings
Libstar anticipates a decrease in normalised earnings before interest, taxation, depreciation, and amortization (EBITDA) for the year, projecting figures between R988 million and R1,009 million compared to the prior year’s R1,032 million. Normalised HEPS from continuing operations are expected to be between 57.0 and 59.0 cents per share, a decline from the previous year’s 65.3 cents per share.
Future Outlook
Despite challenges, Libstar remains optimistic about its future prospects. The company’s commitment to efficiency and prudent financial management positions it well to navigate ongoing economic uncertainties. Investors await the release of the audited financial results on March 15, 2024, for further insights into Libstar’s performance.
