Libstar reports over US$27.6M in impairment charges, faces EPS loss in 2024

SOUTH AFRICA – South African consumer packaged goods company Libstar has reported impairment charges exceeding R500 million (US$27.6 million), leading to a significant loss in earnings per share (EPS) for 2024. 

The announcement came in the company’s annual results statement released on March 18, highlighting challenges in its operations amid shifting market dynamics.

The largest impairment, amounting to R400 million net of tax, was recorded against the Finlar Fine Foods business. 

According to Libstar, this charge stemmed from a “supplier diversification” strategy by a major customer, which cut beef volumes in the foodservice channel. 

Additionally, a report by the company noted a R98.2 million net-of-tax impairment in its Denny Mushrooms division, further straining finances. 

Smaller impairments included a R10.5 million net-of-tax charge tied to contract terminations in Dickon Hall Foods and Cape Herb and Spice, reflecting disruptions in customer relationships.

These impairments drove Libstar to a total diluted loss per share of 54 South African cents, a stark contrast to the 38 cents profit recorded in 2023. 

Normalised EPS, which excludes non-recurring items like insurance proceeds and unrealised currency movements, also fell from a profit of 38.4 cents per share in 2023 to a loss of 32.7 cents in 2024. 

Financially, the company saw revenue grow by 3.1% to R11.7 billion, but sales volumes dropped by 3.2%, largely due to weaker demand in retail and foodservice channels. 

Normalised operating profit declined 6.3% to R631.1 million, with an operating margin of 5.4%, while normalised EBITDA held steady at R974 million.

Despite the setbacks, Libstar is pressing forward with a simplification strategy for its portfolio and operating model. 

“Consumers are expected to remain under pressure in the short to medium term,” a company spokesperson said, explaining the need for adaptation. 

As part of this, the Lancewood brand owner plans to create a shared-services structure within its ambient products category, focusing on wet condiments. 

This will integrate Montagu Foods, Dickon Hall Foods, Retailer Brands, and Cecil Vinegar Works into one framework while preserving each brand’s market identity.

Further restructuring will see Rialto, Ambassador Foods, and Cape Coastal Honey merge into a new sub-category under ambient products. 

Libstar, which also owns Denny and Goldcrest, believes these changes will enhance growth and customer alignment. 

“This integration strengthens our leadership structure and boosts technical capabilities,” a company executive stated. 

Leadership remains optimistic, expressing confidence in the long-term strategy despite 2024’s challenges. 

The board is now exploring additional ways to unlock shareholder value, buoyed by revenue gains despite market pressures.