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Fuel-hedging strategy sees AVI profit curbed
Fuel-hedging strategy sees AVI profit curbed

Fuel-hedging strategy sees AVI profit curbed

FMCG SUPPLIER NEWS - Jan 27th 2015, 09:44

A 19.2% spike in interim sales from AVI’s hake fishing business was tempered at profit level by losses on fuel hedges, as the group’s oil hedging strategy means it missed a halving of oil prices during its six months through December. 

AVI uses fuel oil swaps for hedging purposes, to manage a portion of its exposure to fluctuations in the oil price on diesel fuels, according to its most recent annual report.

Its I&J fishing subsidiary grew sales 19.2% to R982m, with export revenues benefiting from the weak rand, as was the case in its previous financial year.

"I&J’s profit growth for the period was tempered by unrealised losses on fuel hedges following the significant decline in oil prices," AVI said.

AVI, which focuses on fast-moving consumer goods and fashion products, said on Friday group-wide sales for the six months to end-December grew 11.1% to R6bn. Its consolidated headline earnings per share for the interim period were expected to rise between 8% and 11% year on year.

Its beverages business, Entyce, and its snacks and biscuits unit, Snackworks, "both performed well in the constrained environment". Spitz, a high-end footwear retailer, "enjoyed continued strong demand for its core brands and achieved record sales in December".

Snackworks, AVI’s biggest business by sales, grew revenue 13.1% to R1.83bn. Entyce’s sales were up 10.8% at R1.57bn, while the footwear and apparel division grew revenue 11.8% to R1.08bn.

Personal care, AVI’s smallest business unit, reported a 5.7% reduction in sales to R541m following the group’s Indigo Brands business reviewing trading terms with Coty a year before.

AVI said margins improved year on year in the six months ended December.From DFM Publishers (Pty) Ltd 

Read more about: snackworks | i&j | entyce | avi

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