Libstar Holdings (LBR) H2 2024 earnings summary

Executive summary

• Revenue grew 3.1% year-over-year, driven by a 6.3% price/mix benefit offset by a 3.2% volume decline.

• Strategic focus on simplification, growth, and sustainability delivered mixed results, with strong ambient category performance but challenges in perishables, notably from beef volume losses and dairy sector pressures.

• Portfolio simplification advanced with the disposal of Chet Chemicals and closure of the beverage subcategory; further divestments in non-core businesses are planned.

• Cash generation and balance sheet metrics improved, supporting continued dividend payments and meeting leverage targets.

• Operating profit declined due to significant impairments and higher operating expenses.

Financial highlights

• Gross profit margin declined slightly from 21.3% to 21% year-over-year, mainly due to lower perishable product margins.

• Normalized EBITDA remained flat at ZAR 974 million, despite a 5% adverse impact from beef volume declines.

• Normalized headline earnings per share fell 6.5% to ZAR 0.534.

• Cash conversion ratio improved to 80%, and gearing ratio improved to 1.5x, meeting internal targets.

• Dividend maintained at ZAR 0.15 per share.

Outlook and guidance

• Further simplification of the operating model planned, especially in ambient products, with integration of several divisions to drive operational efficiency.

• Focus on category and channel growth, people development, and strengthening the One Libstar culture.

• Anticipates normalization in dairy supply-demand dynamics and continued investment in high-margin categories.

• Strategic review underway to unlock stakeholder value; early stage with updates to follow.

• Continued growth targeted in Exports and Food Service channels.