AVI, the brands business that sells well known household good such as Bakers biscuits, Five Roses, Freshpak (you Rooibos drinkers, you!), Provita, I&J (Feeesh) and distributor of the likes of Carvela, Lacoste and Kurt Geiger shoes through their Spitz stores , released a trading update yesterday. This is for their 6 months to end December. It looks OK at face value, the reason for the share prices of them, and their peer grouping, Tiger Brands and Pioneer Foods sinking over the last six months can be attributed to several things. The weakening Rand and crippling drought means that input prices are going to rise, whether or not these companies can pass it onto their customers remains to be seen. I guess not all of it.
The other "thing" that has happened is that global investors have fallen out of love with emerging markets, that is ironically longer dated in nature. It may take years before some money managers decide that emerging markets are no longer broken. Against that backdrop it is fair to say that the dividend underpin (currently 4.4 percent pre tax) should provide a floor for the stock. Thank goodness for prudent cash management. Sometimes boring can be good.