Libstar, a food producer whose brands include Lancewood Umatie and Cape Herb & Spice's said sales volume growth in the 21 weeks to May 31, 2026 was impacted by a tough consumer trading environment.
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Libstar Holdings' trading revenue for the 21 weeks to May 31 was flat due to a “severely constrained” consumer environment, the JSE-listed food brand manufacturing company said on Thursday.
In a pre-close trading update, the perishables, grocery, baking and baking aids, snacks and confectionery, and household and personal care group, with brands such as Cape Herb & Spice, Umatie and Lancewood, said there had been only low-single-digit value growth in its defined retail channel basket.
The group said also that inflationary pressure on manufacturing expenses had intensified, driven by sharp increases in petroleum-linked input costs, notably in packaging and distribution.
“In this market context, the group's trading performance for the current period was below original expectations,” Libstar’s directors said.
Mitigating actions had been accelerated, including pricing adjustments, further enhanced cost control of labour and manufacturing costs, and remediation within underperforming operations.
Looking towards the second half, the directors said although the inflation outlook remains elevated, the group performance was expected to improve relative to the first half, supported by Libstar's trading seasonality, non-recurrence of capital project-related disruptions, and progress on integration and operational initiatives.
For the period to end-May, the directors said general inflationary pressures and soft retail channel trade was particularly evident in the first quarter, due to higher inventory levels in distribution centres at the start of the year.
Group underperformance relative to expectations was predominantly concentrated in Dickon Hall Foods (DHF) and exports of Dry Condiments.
At DHF, there had been labour challenges and water shortages that led to production disruptions and a significant under-recovery of manufacturing costs during the current period.
Dry condiments export revenue was below expectations, affected by shipment timing, the sustained strengthening of the rand against major currencies, and weaker demand in Australia and Asia.
The dairy, value-added meats and core wet condiments (Montagu Foods, Cecil Vinegar, and Retailer Brands) sub-categories saw “resilient performances,” partly offsetting the challenges.
Channel performance showed strong growth in Food Service, muted growth in Retail and Wholesale, and constrained performance in Exports and in Industrial and Contract Manufacturing.
Revenue growth in value-added meats, the core wet condiments cluster (Montagu Foods, Cecil Vinegar and Retailer Brands), select products and baking was supported by strong food service growth and stable retail and wholesale demand.
Group revenue increased by 0.9%, with volume growth of 0.3% and a price/mix contribution of 0,6%. Excluding DHF revenue, group revenue increased by 3.5%.
Perishable products revenue increased by 1.6%, driven by a volume decline of 0.8% and price/mix contribution of 2.4%.
The category's revenue growth was supported by resilient demand in core dairy sub-category products (comprising hard cheese, soft cheese and yoghurt) and value-added meats.
Ambient products revenue increased by 0.2%, driven by 1.2% volume growth and a 1% deflationary price/mix impact, primarily attributable to the strengthening of the rand against major currencies.
Current period gross profit margins were between 1 and 1.5 percentage points lower than the prior period, driven predominantly by weak cost recovery in DHF and Dry Condiments, together with inflationary pressures from petroleum-linked cost increases across the group.
Operating expenses increased below inflation, reflecting disciplined management of controllable costs.
Libstar continued to generate resilient cash flows despite weaker trading. The balance-sheet position remained well within the group's targeted funding parameters.
Libstar has progressed discussions regarding the disposal of Contactim, its remaining non-food business.
BUSINESS REPORT