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OPERATIONAL REVIEW |
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Entyce |
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 Entyce beverages combines the
strengths of well known and much
loved South African tea, coffee
and creamer beverage brands
such as Five Roses, Freshpak,
Frisco, House of Coffees and Ellis
Brown with top quality short-life
fruit juice, Quali juice and
The Real Juice Company.
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“Market share in the key Five Roses and
Freshpak brands increased as a result of
successful promotional activity, packaging
re-launches and the introduction of new
speciality teas.” |
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Revenue was 15,6% higher than in
2007 due to input cost driven
price increases across all categories and
increased tea and creamer volumes. Gross
margin for the year was 39,7% compared
to 40,6% last year with increased creamer
and juice raw material costs not fully
recovered in selling prices. This impact was
offset by the leverage benefit of higher tea
and creamer sales volumes resulting in
an improvement in operating margin from
12,0% to 12,2%. Operating profit increased
from R160,6 million to R189,1 million with the
largest gain recorded by the tea category.
Tea revenue grew by 16,2% with volume
growth of 10,6% supported by a 5,0%
increase in average realised prices.
Market share in the key Five Roses and
Freshpak brands increased as a result of
successful promotional activity, packaging
re-launches and the introduction of new
speciality teas. Increases in packaging
and transport costs were partially offset
by softer rooibos tea input prices while
increases in the cost of black tea arising
from constrained Kenyan supply were
ameliorated by some forward buying
which deferred the need for further selling
price increases into the 2009 financial year.
Coffee revenue rose by 8,3% with selling
price increases in response to sustained
high coffee bean prices. Margins in the first
half of the year were supported by forward
securing coffee prices but came under pressure in the second half. Sales volumes
were limited by strong competition in this
category and declined by 3,5%.
Creamer revenue rose by 34,2% due to
price increases in response to significantly
higher palm oil and glucose costs, as well
as increased volumes from outsourced
production. Margins decreased but
remained satisfactory. Project plans to
increase in-house production capacity are
being finalised and some investment is
likely to be made in the next year.
Cold beverages, consisting of the Real Juice
and Quali Juice brands, made progress at the
revenue line, achieving material selling price
increases and growing volumes. However
margins were eroded by significantly
higher raw material and transport costs.
The operating loss of R21,3 million is the
same as last year. Subsequent to year end
management has completed consultations
with affected employees to close the inland
region operations (Gauteng, KwaZulu-Natal
and Free State) and in future the business
will operate only in the Cape region which
is inherently profitable, although currently
under pressure from high raw material costs.
The main increases in capital expenditure
in 2008 relate to replacement of tea
packaging equipment and expenditure to
improve technology and increase capacity
in coffee production. |
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| Entyce |
2008
Rm |
2007
Rm |
2006
Rm |
2005
Rm |
Change
08 vs 07
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| Revenue |
1 547,5 |
1 339,1 |
1 228,2 |
1 153,8 |
15,6 |
| Operating profit |
189,1 |
160,6 |
147,2 |
137,5 |
17,7 |
| Operating margin (%) |
12,2 |
12,0 |
12,0 |
11,9 |
1,7 |
| Capital expenditure |
53,5 |
25,5 |
25,2 |
28,2 |
109,8 |
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