AVI Limited says the deteriorating state of South Africa\u2019s public infrastructure is becoming an increasingly serious threat to its operations.<\/p>\n\n\n\n
Poor service delivery has forced the owner of iconic brands such as Five Roses tea and Bakers biscuits to spend more time and money protecting its business from service delivery failures.<\/p>\n\n\n\n
In its results for the year ended 30 June 2026, AVI was direct about the operational challenges facing the group.<\/p>\n\n\n\n
The company said South Africa\u2019s consumer environment remained difficult, with households under pressure from weak economic growth, high unemployment and limited disposable income.<\/p>\n\n\n\n
\u201cSouth African consumers continue to experience pressure from constrained disposable income, elevated unemployment and subdued economic growth,\u201d AVI said.<\/p>\n\n\n\n
However, the problems facing the group extend beyond weak consumer spending. AVI warned that global geopolitical uncertainty has increased fuel price volatility and inflationary pressures, creating further uncertainty across supply chains and operating costs.<\/p>\n\n\n\n
In South Africa, the deterioration of municipal services has emerged as a major operational risk.<\/p>\n\n\n\n
AVI\u2019s directors said that the \u201congoing deterioration in municipal infrastructure in key operating regions continues to increase the cost and complexity of maintaining efficient operations\u201d.<\/p>\n\n\n\n
For a group with major manufacturing plants, distribution networks and retail operations across South Africa, unreliable public infrastructure can create significant disruption.<\/p>\n\n\n\n
Problems with municipal services can affect production, logistics and the ability of businesses to operate efficiently.<\/p>\n\n\n\n
AVI said management has responded by focusing on \u201cprotecting volumes, preserving margins and optimising returns through disciplined pricing, cost management and operational efficiency initiatives\u201d.<\/p>\n\n\n\n
The threat has become significant enough to feature directly in the group\u2019s financial planning.<\/p>\n\n\n\n
AVI stress-tested its budgets against a downside scenario that specifically considered the financial and operational risks associated with deteriorating public infrastructure.<\/p>\n\n\n\n
Despite these risks, the group concluded that it should remain profitable and cash generative even under more difficult conditions.<\/p>\n\n\n\n
\u201cThe Group is expected to remain profitable and cash generative, with the overall financial position remaining sound and sufficient liquidity available to meet obligations as they fall due,\u201d AVI said.<\/p>\n\n\n\n
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