South African food producer Libstar Holdings Ltd on reported a 16.1% drop in full-year earnings on Wednesday after taking a writedown on its business making gourmet teas, blended dairy drinks and fruit concentrates.
The producer of Lancewood dairy products said normalised basic and diluted headline earnings per share (HEPS) for the full-year ended Dec. 31, 2018 fell to 73 cents from 87 cents in the previous year.
HEPS is the main profit measure in South Africa, which excludes certain one-off items.
"An impairment loss in the amount of 42 million rand (€2.52 million) was recorded in respect of the residual dairy-blend and fruit concentrate beverage operations, as the group deliberates its strategic options regarding this component of the business," it said in a statement.
Revenue rose 12.5% to 9.9 billion rand, with organic revenue up 5.1%, bolstered by the launch of Lancewood branded dairy products.
Libstar has increased capacity and entered high-growth categories over the past year, buying Sonnendal Dairies, ready-to-eat food manufacturer Millennium Foods and Khoisan Tea.
It plans a frozen speciality bread facility, as well a new plant to toast granola and alongside similar manufacturing initiatives in perishables and specialised food packaging.
"In the coming year, the benefits of new manufacturing facilities and added capacity is expected to positively impact FY2019 trading results," it said.