In its latest trading statement for the six months ending 31 December 2024, AVI Limited has reported a modest 1.1% increase in group revenue compared to the previous year.
AVI announced this in a trading statement released on the JSE news service, SENS on Wednesday morning.
This growth, however, comes in a difficult landscape marked by significant input cost pressures and varying demand across its product categories.
The company's Entyce division, which focuses on beverage production, has managed to achieve revenue growth primarily through necessary price increases aimed at countering these rising costs.
On the other hand, Snackworks saw a 1% dip in revenue, affected by comparisons to a particularly strong prior year.
This highlights the broader challenges encountered by companies as they strive for stability amidst fluctuating economic signals.
I&J, which operates in the fishing sector, fared somewhat better, achieving a commendable 3.9% revenue growth.
This improvement was aided by price hikes despite experiencing lower fish sales volumes, a scenario primarily caused by a less favourable catch performance and a suboptimal catch mix.
However, weak demand from key Asian markets, along with lower selling prices in the abalone category, posed additional hurdles.
On the personal care front, the company recorded a revenue decline, signalling that the gains in roll-on and colour cosmetics were not sufficient to offset downturns in the aerosol and fragrance categories.
The fashion retail segment similarly struggled, with inventory shortages stemming from supplier and global supply chain issues leading to a disappointing sales performance in December, which fell short of last year's robust figures.
Despite the challenges, March 2025 forecasts suggest a consolidated gross profit margin improvement compared to the prior year, primarily driven by diligent cost control measures, enhanced manufacturing efficiency, and strategic selling price adjustments.
With selling and administrative expenses tightly managed, the group saw a commendable rise in both operating margin and profit.
Net finance costs have incrementally increased this period, attributed mainly to higher average borrowing levels following the payment of a special dividend.
Nonetheless, these costs have been partially offset by decreased interest rates, keeping the effective tax rate consistent with the prevailing corporate tax rate of 27%.
Reflecting on capital gains, AVI reported an increase linked to the disposal of assets and business operations from I&J's Umsobomvu joint venture, which contributed R12.6 million after tax.
This reinforces the group's robust financial positioning and capacity to adapt to market shifts.
Looking forward, AVI anticipates its consolidated headline earnings per share for the six-month period to climb between 8% and 10%, translating to figures between 404.2 cents and 411.7 cents.
Meanwhile, earnings per share, incorporating capital gains and losses, are projected to increase between 9% and 11%, reaching between 407.8 cents and 415.3 cents.
Highlighting the company’s commitment to transparency, shareholders are advised that the full results for this period are expected to be publicly disclosed on or about 10 March 2025.
BUSINESS REPORT