Libstar Holdings says the completion of its Mega Sauce Factory is a milestone in the consumer packaged-goods manufacturer’s operational simplification programme.
The share price surged strongly 5.9% to R3.60 on the JSE on Tuesday morning, although it remained below its R3.90 level a year earlier.
Founded in 2005, Libstar owns brands such as Lancewood, Cape Herb & Spice and Goldcrest. The group supplies the retail, wholesale and food-service sectors and is also an outsourced manufacturing partner for major food businesses.
It has consolidated its wet-condiments production on to a single manufacturing platform, which is expected to enhance productivity, improve customer service, reduce operational complexity and unlock manufacturing efficiencies. The new plant was established by integrating Dickon Hall Foods into Montagu Foods.
The group announced the completion of the facility alongside the release of its interim results for the six months ended 30 June. Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 4.3% to R453.2 million, while normalised headline earnings per share (HEPS) fell by 2.4% to 24.2 cents.
The results fell short of management’s expectations, with the underperformance concentrated mainly in the Dickon Hall Foods division and the dry-condiments sub-category, directors said in the results announcement.
CEO Charl de Villiers said the expanded facility is also expected to support innovation and provide a stronger platform for growth across existing and adjacent product categories.
“The Mega Sauce Factory is more than a consolidation project. It gives us greater scale, a leaner operating structure and stronger innovation capability. It positions us to improve service levels, strengthen profitability and support sustainable growth over the medium term,” he said.
De Villiers said management’s immediate focus is on optimising output, service levels and profitability to progressively unlock the benefits of the new facility.
He said the group delivered resilient performances across key categories during the six months, despite continued pressure on consumers and low food inflation, which constrained category-value growth.
Manufacturers also continued to absorb higher packaging, logistics and distribution costs, while a stronger rand and weaker offshore demand weighed on export competitiveness.
Revenue increased by 0.7% to R5.8 billion, supported by underlying volume growth of 1.1% after excluding extraordinary items.
“The first half reinforced the importance of focusing on what we can control,” De Villiers said.
“We continued to simplify the business, strengthen our financial position and invest in the categories and capabilities that will drive future growth, while also returning capital to shareholders through increased dividends and share repurchases,” he said.
Perishable Products delivered a strong performance, with revenue up by 2.5% and normalised EBITDA increasing by 13.5%, supported by continued growth in dairy and value-added meats.
Ambient Products was affected by the Dickon Hall Foods integration, lower private-label export volumes and currency-related pressure on export competitiveness. Select Products, Baking and Cape Herb & Spice’s own-brand products, however, delivered encouraging performances.
Food Service continued to be a standout growth channel, increasing by 11.2%, while Retail & Wholesale revenue grew by 3.2%. These gains were partly offset by weaker export demand and lower Industrial & Contract Manufacturing volumes following the loss of a contract within Dickon Hall Foods.
The Cape Herb & Spice consolidation project remains on track for completion in the first half of 2027. The disposal of the Phesantekraal property, which housed Denny Mushrooms’ operations, was completed after the reporting period and generated proceeds of R65m.
Libstar also delivered R10m in annualised procurement savings and continued to advance its renewable-energy and water-recovery initiatives.
“Consumer pressure is expected to persist, with low category inflation and ongoing cost pressures continuing across the sector,” De Villiers said in a statement. He added that other key simplification initiatives were progressing according to plan.
“With our clear strategy and a stronger operating platform, we remain focused on delivering improved returns and sustainable growth,” he said.
De Villiers said post-period trading had improved relative to the first half. Although there were additional trading days, there was also “encouraging evidence of improved trading momentum”.
However, household incomes remained under pressure, while subdued category inflation, intense competition and cost pressures—particularly across packaging and distribution—continued to weigh on the business.
edward.west@nationamg.co.za
THE TIMES