Tiger Brands mulls an interim dividend

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Tiger Brands mulls an interim dividend

Published Date: 2020-04-09 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tiger Brands mulls an interim dividend

The food producer says a payout will depend on circumstances, as it pledges to keep prices on hold for the duration of the lockdown.

Tiger Brands says it is still considering an interim dividend as it adds up the additional costs it will incur to keep its operations running during the national lockdown. These include R60 million to cover incentives and transport for staff who continue to work at its sites.

In an update on its response to Covid-19, the fast-moving consumer goods group said it was not yet able to quantify the impact the pandemic would have on its financial and operating performance this year. However, it faced a number of constraints, including the temporary closure of some operations, pricing restraints placed on it by the government and the potentially recessionary impact of the lockdown.

Regulations published by the Department of Trade and Industry last month restrict price increases to those needed to cover rising input costs. The restrictions are aimed at preventing "excessing or unconscionable, unfair and unreasonable prices". Tiger Brands said this didn't affect its ability to recovery cost increases preceding the three-month period up to 29 February. While the company had made submissions to the department to obtain clarify on interpretation, it committed not to raise prices of any of its production until 20 April.

The company said most of its manufacturing and distribution sites had been identified as essential services and continued to operate. It also continued to provide food to children and community beneficiaries under its various corporate social investment programmes. However, manufacturing of some products had been suspended, including sorghum-based beverages, some of its consumer brands, home and personal care, and some export and international categories.

Meanwhile, a due diligence of its Value Added Meat Products (VAMP) business, which was linked to the listeriosis outbreak more than two years ago, had been completed. It said it had received offers from a consortium for the business on a going concern basis, including the Polokwane, Olifantsfontein and Germiston operations. It expected to complete sale and purchase agreements by the end of the month.

The group has already guided the market to expect a decline of between 29% and 36% in headline earnings per share from continuing operations for the six months to end-March. It said its strong balance sheet meant there were no pressing liquidity challenges at the moment and it would consider the appropriateness and/or quantum of any dividend declaration for the period after taking the prevailing circumstances into account.

Its shares declined 1.2% to R177.63 yesterday.





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