Libstar announces double-digit H1 HEPS growth

South African food producer, Libstar, has announced double-digit growth in headline earnings per share (HEPS) for the first half of 2024. The company's shares have surged by 2.8 percent, marking an increase of 18 percent since the beginning of the year. This growth can be attributed to a 5.2 percent increase in revenue driven by its Ambient Products category. In an exclusive interview with CNBC Africa, Charl de Villiers, CEO of Libstar, discussed the company's strategic initiatives and the challenges it has faced in the export market. De Villiers highlighted that Libstar embarked on a new strategic direction last year, focusing on simplifying its portfolio and operating structures to improve efficiency. Despite facing volume losses due to the diversification of supply within its value-added meats facilities by a multinational customer, Libstar managed to mitigate the impact by gaining volumes in the export channel. De Villiers acknowledged the pressure on the consumer market and emphasized the company's role in balancing pricing and volumes. One significant setback for Libstar was the loss of a major client, believed to be McDonald's, leading to a decline in volumes. While the company has managed to regain some volumes, it has yet to fully offset the loss. However, Libstar is exploring opportunities in export markets, particularly in the Middle East, where it recently obtained certification. The food industry has witnessed upward pressure on prices to offset rising costs, resulting in consumer pushback and volume losses. De Villiers noted the shift towards value offerings by consumers, with a growing preference for private label products and a demand for varied pack sizes. Libstar has responded to these trends by offering products that cater to consumer preferences for value and convenience. Moreover, the company has faced challenges in exporting its products due to port inefficiencies and adverse weather conditions. Despite a strong pipeline of orders from international customers, delays in shipments have persisted, especially from the Cape Town port, the company's primary point of shipment. Libstar has implemented contingency measures, such as holding higher inventory levels and collaborating with shipping companies to prioritize shipments. Looking ahead, De Villiers expressed optimism about the company's outlook, anticipating a boost in demand as inflation decreases and potential interest rate cuts support consumer spending. Libstar aims to leverage its simplified business model to focus on high-growth channels such as exports and food service. The company plans to enhance its product offerings and front-end capabilities in the second half of the year to drive growth. Despite the challenges in the export market and competitive landscape, Libstar remains resilient and strategic in its approach to sustain growth and meet consumer demands.