South Africa's Libstar has warned its full-year profit and earnings per share will be down on the previous 12 months due to “challenging” market conditions.
The group has forecast a drop in normalised EBITDA of 17.3% to 19.3%, reaching R401.3m ($21.1m) to R411.3m for the year ending December 2023.
Libstar expects earnings per share of 10.1 to 11.3 South African cents in the first half, compared to the prior year's EPS of 24.6 cents, the group revealed in a trading update. That would represent a drop of 54.1% to 58.9%, it said.
Headline earnings per share are predicted to decline 54.9% to 59.8% in the six months to 30 June to 9.9 to 11.1 cents.
Libstar said market conditions remained challenging as “persistent high levels of inflation, interest-rate hikes and ongoing load-shedding increasingly constrained consumer demand”, referring to the recent power outages in South Africa.
The group added that retail volumes declined mainly due to the discontinuation of “unprofitable HPC lines”, along with lower production volumes of fresh mushrooms after its Shongweni production facility near Durban was destroyed in a 2022 fire.
The Goldcrest Honey brand owner said it posted first-half revenue growth of 4% with selling price inflation and change in product mix contributing 10.7%, although it revealed a 6.7% drop in volumes. Input-cost inflation remained "elevated", Libstar added.
Cape Town-based Libstar is a branded and private-label food manufacturer with a mix of snacks and confectionery, spices and seasoning mixes and bakery products. The business exports to over 50 countries, including the US and Canada, Australia, destinations in Europe, and South America, Asia and Africa.
South Africa’s ongoing energy crisis has caused problems for companies around the country.
"Elevated levels of load-shedding, more severe than that experienced during H1 2022 and H2 2022, continued to have a significant impact on operational costs and the group’s gross profit margin," Libstar said in the trading update.
In commentary around the release of its annual results in March, Libstar said load-shedding had added R39m to its operating costs and that it made a R13m capital investment in generators during the year with an additional R6.3m spent on generator capacity since January 2023.
