Libstar posts 18% profit fall as expenses rise

Libstar on Wednesday reported a 17.7% drop in half-year earnings, hit by expenses related to the Covid-19 pandemic and related trading restrictions.

Libstar said normalised headline earnings per share, a key profit measure in South Africa, from continuing operations fell to 24.2 cents for the six months ended June 30 from 29.4 cents a year earlier.

The firm approved the payment of a cash dividend of 25 cents per share for the year ended December 31, 2019. Libstar had postponed the payment until the release of half-year results.

The company recorded R44 million ($2.64 million) in pandemic-related expenses during the period.

Group revenue rose 1.9% to R4.7 billion.

Revenue from its perishables category, its single largest contributor to revenue, fell by 1.7% as strong demand for products consumed for in-home cooking purposes and dairy was not enough to offset low revenue from meat, chicken and fresh mushrooms due to the closure of hospitality venues and restaurants.

Sales from groceries, the group’s second largest contributor to revenue, fell by 2.1%, impacted by delays in the shipment of exported dry condiments at Cape Herb & Spice, the category’s largest business unit.

Strong demand for baking products as consumers stayed and ate at home saw its baking and baking aids division increase sales by 22.9%, while household and personal care products rose by 11.5%.

The firm said it was seeing “promising” signs of recovery, particularly as the food service sector has reopened and shipment fulfilment rates have improved.

However, it noted the impact of “increases in unemployment levels, in particular, has yet to fully play out in consumer demand”.