Diversity is AVI’s strength as profit weathers storms
bdlive.co.za - Jan 27th 2016, 14:54
Consumer brands group AVI is set to report consistent profit growth in the first half of its financial year, despite the marked deterioration in the economy and household spending over the period.
The company, whose brands include Five Roses tea, House of Coffees, Bakers biscuits, and I&J, said on Monday headline earnings per share were expected to grow between 10% and 12% for the six months ended-December. AVI is due to publish its interim results on March 7.
The profit growth is commensurate with that achieved in the first halves of the previous two years, signalling AVI’s resilience in a tough consumer environment in which household budgets have been squeezed tight by rising inflation and interest rates, slow wage growth, and stubbornly high unemployment.
AVI said profits for the forthcoming period would be lifted by gains from its currency-hedging strategy and selling price hikes across its product range, which offset cost pressures from the sharply weaker rand.
AVI buys foreign currency derivatives to manage potential foreign exchange losses.
The company is primarily exposed to the euro, the dollar, and the Australian dollar. About 25%-75% of its estimated foreign currency exposure on forecast sales and purchases over the following 12 months is hedged, as stated in its annual report.
As well as food products, AVI owns shoe and apparel stores Spitz, Kurt Geiger, and Green Cross.
The group said festive season sales were "sound", with Spitz achieving its sales target and its fishing business, I&J, "enjoying improved export margins as a result of the weaker rand".
Last year, the business was hurt by lower catch rates, causing an increase in prices.
Ron Klipin, an analyst at Cratos Wealth, said the profit guidance was in line with most analysts’ expectations.
Mr Klipin said AVI’s diversified portfolio safeguarded it from cost pressures caused by the weakening rand and the drought in SA that has caused maize prices to more than double in the past 12 months.
"I think AVI is in a better position than Pioneer Foods and Tiger Brands for not purely being in the grain market."
AVI’s share price has lost 2.47% so far this year, valuing it at about R26.2bn. Rivals Pioneer Foods and Tiger Brands are down 19.53% and 12.77%, respectively, since January 1, according to Iress data. This gives Pioneer a market cap of about R30.3bn and Tiger Brands R54.4bn.
The all-share index has dropped 6.87% since January 1.From DFM Publishers (Pty) Ltd
AVI earnings slip as consumer spending remains constrained
09/09/2019 - 09:33
Consumer goods group AVI, whose brands include footwear retailer Spitz and Five Roses tea, trimmed its final dividend 4% in the year to end-June as it continued to feel the pinch from a constrained consumer environment.
AVI hit by constrained consumer spending
13/03/2019 - 12:42
Food and beverage company AVI Limited felt the pinch of constrained consumer spending as income from its shoe brands Green Cross and Spitz slid in the half year to December, resulting in revenue in the footwear and apparel category declining by 9.2 percent to R1.14billion.
Spitz owner AVI says footwear sales walked all over its results
12/03/2019 - 10:27
AVI, whose brands include Bakers biscuits and seafood business I&J, said on its footwear businesses struggled the most in the six months ended December.
Shares in Five Roses owner plummet after dismal trading update
28/01/2019 - 08:56
Fast moving consumer goods group AVI warned shareholders that its interim sales were flat and its headline earnings would decline by up to 7%.
AVI aims to resole Green Cross
13/03/2018 - 08:11
Consumer brands giant AVI, which performed commendably in the half-year to end-December, is determined to reboot its footwear division.