The slide in AVI’s share price was among the biggest declines on the market on Monday, even though interim headline earnings per share increased by 8.9%, and the dividend was raised by the same percentage to 220 cents per share.

The share price was trading 4.1% lower at R91.13 on Monday afternoon, barely changed from R91 a year ago. The price decline outstripped the -1.89% and -3.16% declines in the JSE Foods and JSE Personal Goods indexes, respectively, at the same time.

The tough consumer environment in South Africa was reflected in revenue for the diversified fast-moving consumer goods group, which only grew by 1.1% for the six months ending December 31. Operating profit increased by 4.6%.

Revenue growth in Entyce, the coffee, creamer, and tea products division, was underpinned by price increases to ameliorate significant input cost pressures, the group directors said.

Snackworks’ biscuit and snacks revenue ended 1% lower off a strong prior year base.

I&J’s fishing products revenue grew 3.9%, benefiting from selling price increases in the fishing business and a weaker exchange rate, even though fish sales volumes fell due to a poorer catch mix and catch performance. Additionally, abalone selling prices were lower, and there was weaker demand in Asian markets. I&J profit improved markedly though, rising to R61 million from R22.3m.

The Personal Care division's revenue declined, with growth in roll-on and colour cosmetics not sufficient to offset lower demand in the aerosol and fragrance categories.

The fashion retail brand portfolio had to deal with supplier and global supply chain issues, which impacted sales. December retail sales fell short of a strong prior year, partly due to stock shortages in some key brands and styles.

Group gross margins were protected, and operating profit increased by 8.9%. Cash from operations increased to R2.16 billion from R1.87bn due to the improved operating profit and a reduction in working capital compared to last year’s increase.

At I&J, fish sales volumes were negatively impacted by aggressive local competition, poor catch mix, and weaker fishing performances, resulting in lower volumes caught, despite an improvement in catch rates per sea day.

On innovation, the Air-Fri’kn Amazing range was launched in October and had started to gain traction, delivering good volume with further growth expected through the second semester as distribution improves.

Coffee revenue increased 10.3%, with strong sales from retail brands supported by an improvement in the Ciro out-of-home coffee business. Revenue growth was seen in the premium, mixed instant, and affordable brewed categories due to selling price increases required to ameliorate a continued increase in underlying Arabica and Robusta coffee prices.

Notwithstanding an improvement in mixed instant market share, competitor discounting, consumer affordability, and high selling prices constrained demand for retail brands, with only the affordable brewed segment achieving sales volume growth through regional activations and distribution campaigns.

Biscuit revenue fell by 1.5% due to lower sales volumes, partially offset by selling price increases. Sales volumes ended lower than the strong prior year, supported by creamed biscuit innovations.

Snacks revenue increased marginally due to higher selling prices, partially offset by a decrease in sales volumes. The launch of a more accessibly priced Cheese Curls formation was not sufficient to arrest declines across the rest of the portfolio. The potato chip category remained competitive.

BUSINESS REPORT

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AVI share price falls after reporting mixed interim results from its foods, personal care products