South African food producer gets raw milk boost

South African food producer Libstar has reported a significant turnaround in its operations and financial health, with the help of extraordinary milk sales.

Founded in 2005, Libstar manufactures and distributes branded and private-label food products ranging from dairy to value-added meats, snacks, baked goods, and convenience products.

It is known for brands like Lancewood, Denny Mushrooms, Cape Herb & Spice and Montagu Foods.

In 2023, the company started to implement a three-year strategy aimed at simplifying its portfolio, driving profitable growth and sustaining its financial performance.

This strategy is designed to enhance the business’s cost competitiveness, improve earnings quality and deliver sustainable improvements in return on invested capital (ROIC).

According to Libstar, the strategy has started to pay dividends, with the company’s recovery well underway, underpinned by structural improvements in portfolio quality, capital discipline and cash generation.

On Tuesday, 17 March, Libstar released its results for the year through December 2025, which revealed a significant improvement in the company’s performance.

Libstar recorded 8.2% revenue growth to R12.33 billion, and a reduced loss of R223,000 for the year, a 99.93% improvement compared to 2024.

The company’s earnings swung back into the black in 2025, with Libstar reporting earnings of 13.3 cents per share from its continuing operations, a significant improvement from the loss of 25.2 cents per share in 2024.

Libstar explained that its sales volumes increased by 10.6% over the year, the majority of which was driven by the extraordinary impact of two contributors –

• The first is an 8.6% increase in group volumes due to the on-sale of unprocessed raw milk to industrial customers
• The second is a 1.2% decrease in volumes recorded in 2024 due to the closure of Libstar’s Chamonix Springwater business, which provided a lower comparative base for 2025

Part of Libstar’s turnaround strategy was to simplify its portfolio, which saw the company transition from five categories to a streamlined two-super-category model comprising seven sub-categories.

These two new “super-categories” are Ambient and Perishable products, with Libstar having slimmed down its portfolio through disposals, targeted closures and business integrations.

In the 2025 financial year, Libstar’s Ambient Products category delivered revenue growth of 7.4%, improved gross profit margins to 25.9% from 25.4% in 2024, and normalised EBITDA growth of 3.1%.

Its Perishable Products category delivered revenue growth of 9.2%, improved gross profit margins to 17.5% from 16.8% in 2024, and normalised EBITDA growth of 12.5%.

On a group level, Libstar managed to increase its adjusted ROIC to 10.9%, up from 8.6% in 2024.

Based on these solid improvements, Libstar declared a dividend of 28 cents per share.