AVI profits increase
IOL Business - Mar 13th 2012, 08:56
Consumer group AVI (AVI) on Monday posted a 30% jump in diluted headline earnings per share from continuing operations to 187 cents in the six months ended December 2011, from 143.3 cents a year earlier.
Revenue from continuing operations rose by 8.6% to R4.49 billion due to selling price increases in most categories, stronger export revenue in I&J due to the weaker rand and volume growth in Spitz, Indigo and Tea.
Operating profit increased by 26.8% to R855 million due to the higher gross profit margins and a constrained increase in selling and administration costs, which rose by 1.7% compared to the first half of last year due mainly to I&J recording material foreign exchange gains compared to losses in the first half of last year.
An interim dividend in line with this new policy will be considered by the board in April 2012 and will be subject to the new dividend withholding tax, the company said in a statement.
AVI said it believed that consumer demand would remain restrained in the second half of its financial year. “However, the group has good levels of forward exchange cover in place to limit the cost of imports and some commodity costs have started to soften, both of which will allow more leeway to manage the balance between price, volume and profitability with the flexibility that constrained trading environments require.”
The projects commissioned in the last year have improved “our ability to compete in terms of capacity, quality and cost efficiency and further projects are in progress. In addition we continue to work on various initiatives that should deliver organic growth over time,” it said.
These include local and regional market opportunities, factory improvements and on-going development of shared and support services.
AVI said that at current exchange rates, I&J's performance in the second half was likely to be reasonably in line with the second half of last year and consequently it was unlikely that the rate of earnings growth in the second half of the financial year would be as high as in the first half.
“The board is confident that AVI is well positioned to continue pursuing growth from the current brand portfolio while remaining vigilant for brand acquisition opportunities both domestically and regionally,” the company said. - I-Net Bridge
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