Selling almost nothing extra and still making more money is a particular kind of year. AVI, which owns Five Roses, Freshpak, Bakers, Willards and the Spitz shoe chain, grew revenue 1.4% in the twelve months to June, and grew operating profit 4.4%. The board's response was to declare a special dividend of 300 cents a share on top of the usual one.
The gap between those two growth rates is where the year's work went. Gross margin held at 42.4 cents in every rand of sales, against 42.7 cents a year earlier, while selling and administrative costs came down 3.2%. AVI attributes R110.3 million of the improvement to cost management and restructuring it has been running across two financial years.
Some of that came out of the payroll. AVI ended the year with 8,680 employees against 9,108 the year before, a reduction of 428. Most of it sat in Entyce Beverages and Snackworks, where the combined headcount fell from 2,586 to 2,176. The company does not use the words job cuts anywhere in its results. It calls this restructuring, and reports the number in a table.
The half that went wrong
The second six months were the harder ones. Weaker consumer demand met materially higher fuel prices and sustained high interest rates, and then the last quarter lost sales outright, because distributors and wholesalers held off buying ahead of the threat of unrest around the 30 June national protest action. Entyce, the tea and coffee business, went backwards on both lines, with revenue down 2.5% and operating profit down 3.4% as competition in creamers forced price cuts and stopped a repeat of the previous year's unusually good result.
The fish that paid for it
I and J had the year nobody else in the group had. The fishing business lifted revenue 10.2% and grew operating profit by close to a third, with fishing profit alone up 47.5% to R395.6 million on better selling prices and more hake sold. Abalone went the other way, with the operating loss widening to R77.6 million on oversupply, weak prices and poor demand in export markets.
AVI says the trading environment stays uncertain and that growth is likely to remain subdued until the economy improves. It split Entyce and Snackworks into separately managed businesses from July, each with its own team. The special dividend still needs exchange control approval and is payable on 19 October, after which the company expects its borrowings to sit at the top of its normal range.
