AVI Limited

Revenue grew 1.4%. Gross profit margin edged down from 42.7% to 42.4%. Operating profit increased 4.4% and the operating profit margin improved to 22.9%. Net finance costs fell to ZAR 191 million, the effective tax rate was 27.4%, headline earnings rose 6%, and headline earnings per share increased 5.3%. Cash generated by operations improved 10.6% to ZAR 4.4 billion, cash-to-EBITDA conversion was 101.8%, capital expenditure fell to ZAR 387 million from ZAR 601 million, net debt fell to ZAR 1.7 billion, and net debt-to-EBITDA improved to 0.4. The final dividend was ZAR 4.18, total full-year dividend was ZAR 6.63, and a special dividend of ZAR 3 per share was approved. Management did not give formal next-quarter or full-year numeric guidance, but said the current financial year is likely to remain difficult and that commodity costs, aside from energy, look relatively benign with hedging protection in place.

Simon Crutchley framed the year as “a tale of 2 halves,” with a stronger first semester and a much more challenging second semester due to energy inflation, weaker demand, and wholesale channel anxiety. He emphasized that AVI’s focus is on medium-term resilience, disciplined pricing, simplification, and innovation rather than chasing short-term volume. His tone was confident but cautious: he said the business is “fitter and more resilient” than before, while also acknowledging the operating environment remains volatile and competitive.

Justin O’Meara highlighted the financial discipline behind the results: gross margin was broadly protected at 42.4%, selling and administrative expenses fell 3.2%, and operating margin expanded to 22.9%. He attributed the improved cash generation to higher operating profit, better working capital, and noncash add-backs, including the ZAR 84 million unfavorable biological asset revaluation at I&J, while net finance costs declined to ZAR 191 million thanks to lower rates and borrowing levels. He also noted restructuring benefits of ZAR 110 million in the current year, with initiatives expected to deliver just short of ZAR 40 million more next year, and said net debt declined to ZAR 1.7 billion, supporting the special dividend.

Analysts focused on channel mix, wholesale order deferrals, commodity/hedging exposure, I&J fishing rights, abalone valuation, water resilience, and the impact of online gambling on consumer spending. Management said it does not try to over-index one channel versus another; every channel matters, and the goal is to serve each with the right formats, with modern retail still the biggest channel and the informal system growing. On wholesale, Simon said there was a recovery over the last 3 months, with August showing replenishment, so he does not expect a repeat of the Q4 impact if there is no further disruption. On commodities and water, management said hedging has protected margins and that the business has invested heavily in water backup so operations should remain viable even in a drought-like scenario, with the bigger issue being infrastructure disruption rather than a total lack of water.