South African food producer Libstar on Thursday, 16 March reported an 11.8% fall in full-year earnings as price rises failed to offset higher costs.


Consumer goods producers have lifted prices to cope with surging costs for raw materials, energy and packaging after Russia's invasion of Ukraine compounded pandemic-related supply chain logjams. But they face a challenge in how much they can raise prices without sacrificing sales as increasingly cost-conscious consumers trade down.

Normalised headline earnings per share from continuing operations fell to 65.3 cents from 74 cents a year earlier.

Price hikes helped the maker of Denny Mushrooms and Lancewood dairy products deliver revenue growth of 10.7% at R11.7bn in the year ended 31 December. Sales volumes rose 3% while pricing and mix changes contributed 7.7% to sales growth.

Products sold to the food service, industrial and contract manufacturing industries contributed strongly to revenue.

Cost of load shedding

Libstar's year-on-year gross profit margin declined to 20.7% from 22.2% reflecting higher costs in its main export-facing divisions and cost inflation in the rest of the portfolio.

Additionally, unprecedented levels of load shedding added R39m in direct operating costs, of which 70% related to three divisions: Lancewood, Denny Mushrooms and Finlar Fine Foods.




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