AVI, the branded food and consumer goods group, declared a 280 cents a share special dividend for the year to June 30, on top of an ordinary final dividend of 388 cents per share that had increased by 25.2%.
The final dividend brought the total ordinary dividend up by 22.4% to 590 cents a share for the year, after revenue increased by 6.3% and price increases in all categories offset cost increase pressures. The special dividend was to return debt to the upper limit of the group’s target range.
Headline earnings a share increased 24.1% to 687.1 cents in an environment of weak consumer demand and increased competition in all categories. Capital expenditure for capacity and efficiency gains came to R476.5 million. Operating profit increased by 21.7%, the results showed yesterday.
Directors said unreliable municipal infrastructure had also impacted manufacturing sites negatively through the year. Fish products group I&J was impacted by poor catch rates and constrained abalone markets. The weaker rand, raising raw material costs and direct load-shedding costs of R33.2m also impacted the results.
Gross margins nevertheless recovered to pre-Covid levels after strong cost control and efficiencies supported operating leverage.
A strong second half was supported by Entyce Beverages due to improved margins and volumes across all categories. I&J also saw better catch rates in the second half as well as higher selling prices from a weaker rand.
The Personal Care segment was negatively impacted by cessation of lower-margin Coty business, with a sound performance from owned brands in Footwear and Apparel, challenged by a competitive and constrained consumer environment.
Personal Care’s revenue contribution fell 16.4% to R1.02 billion. Entyce Beverages’ increased 18.2% to R3.03bn. Snackworks’ revenue increased 6.4% to R5.6bn.
At Entyce, there was a recovery in tea off a weaker base, supported by coffee growth and strong creamer performance.
At Snackworks, there were selling price increases, factory efficiencies and an improved snacks sales mix, partly offset by lower volumes despite innovations launched in the second half.
At I&J, there was improved fishing profits off a weak base, partly offset by lower abalone profits.
At Personal Care, its core business growth was supported by better margins, cost-saving initiatives and efficiency from range rationalisation offset by the cessation of Coty business from July 2023.
In Footwear and Apparel there was a strong performance in December offset by a challenging second half with constrained demand and endemic competitor discounting.
At Entyce, the pleasing Creamer performance from the Ellis Brown brand was supported by production efficiencies, sales volumes growth and higher selling prices taken in response to input cost pressures.
Sales volume growth reflected market share gains and benefits from competitor supply disruptions.
In Snackworks, an increase in Biscuit profit was supported by top-line growth and improved factory efficiencies. There were selling price increases to recover input cost pressures and protect margins. Volumes fell but were supported by strong festive season demand for Bakers Choice Assorted, as well as innovations launched, costs managed and the benefits of investment to support brands.
Also in Snackworks, sustained competitor activity impacted potato chip sales volumes. Maize-extruded snacks volumes were in line. A lower-priced cheese curls format was launched in the second half, supported by better sales mix, improved factory yields and effective cost management.
BUSINESS REPORT