• AVI reported a good set of results for the interim period, in line with trading guidance provided earlier this year.

  • The group, with a diversified portfolio of strong brands, is the number one or two player in its food categories, and once again reflected excellent execution by an experienced management team.

  • Certainly relative its peers such as Tiger Brands, RCL Foods, and Zeder, the results were resilient in an extremely challenging operating environment for consumer focused businesses.

  • Soft spots in the AVI operations were the groups’ fashion operations consisting of upmarket footwear brands Spitz and apparel names such as Lacoste, and Kurt Geiger. This division experienced disappointing festive season sales, partially due to the negative impact of Black Friday, and a lack of consumer affordability. Operating profit in that segment declined by 14.1%, due to lower operating margins.

  • The Green Cross operation has been merged with the Spitz operations and downsized, with operating profits stabilizing.

  • The I&J fishing businesses showed strong results - the operating profit was up by 10.6%, despite flat revenue growth, and the Abalone operations were impacted by lacklustre demand from the middle east and china due to the Coronavirus outbreak.

  • Snackworks showed solid results, with price increases in biscuits and Willard’s, whilst raw materials prices were, on balance, well contained.

  • Entyce, consisting of Rooibos teas and market leader Five Roses, increased operating margins by 0.4% in a difficult market despite a decline in revenue of 3.20%. This strategy of managing margins well, despite lower sales volumes, has been a major win for AVI throughout the business cycles, and was also prevalent in the Coffee and Creamer markets.

  • Strong financials metrics, in the form of sustained conversion of earnings into cash, returns on capital employed (ROCE) in excess of 25%, were enhanced by the sale of its Australian fishing operations, resulting in a capital profit of R374 million.

  • Headline earnings per share declined by 3.8% and an interim dividend of R1.60 was declared, down by 3%. But an attractive dividend yield in excess of 4.5%, is likely for the current year with a prospect of share buy backs too, or a special dividend, if no major acquisitions are found.