Tiger Brands suffers the January blues

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Tiger Brands suffers the January blues

Published Date: 2021-02-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tiger Brands suffers the January blues

The fast-moving consumer goods group says after a strong start to its financial year, sales came under pressure last month.

Tiger Brands says after a strong start to its financial year, it had a particularly bad January. While it's too early to say whether this means it's in for an even tougher year, it says it's confident that initiatives taken will support its performance.

In a business update, the fast-moving consumer goods group reported growth in first-quarter revenue of 12.1%, underpinned by overall price inflation of 9% and volume growth of 2.6%. However, the strong start to its financial year was diluted by a particularly poor performance last month, which reduced overall revenue growth from continuing operations for the four months to end-January to 9.4%. And most of that was due to price increases.

Tiger grew volumes in its Maize, Jungle Oats, Rice, Snacks & Treats and Beverages categories, as well as Home Care, Personal Care and Baby. But it experienced volume challenges within its Bakeries, Ace Instant (maize) and Sorghum-based breakfast offerings, as well as Groceries and Deciduous Fruit. Volume declines in bread were behind the overall market decline, while Groceries' volumes were affected by increased competitor activity, supply chain disruptions and poor seasonal demand. Exports did well thanks to increased demand from Zimbabwe and a resumption of sales into Nigeria.

Although margins came under pressure due to agricultural inflation, the company said cost saving initiatives and improvements it made to make its supply chain more efficient kept its overall gross margin stable.

Tiger Brands said it expected earnings per share (EPS) from total operations for the six months to end-March to be between 265% and 285% higher than the 210c reported last year, while headline EPS would be 35% to 45% up from the 489c previously reported.

From continuing operations, which exclude the loss-making Value Added Meat Products (VAMP) business it sold, it said EPS would be 105% to 125% higher than the 332c reported for the first half of last year and headline EPS would be between 10% and 20% up from the 611c reported. Last year's EPS were also impacted by impairment charges of R557 million, all of which related to its continuing operations.

Tiger Brands said it had also made progress on the disposal of its Deciduous Fruit business. Following the receipt of several indicative offers, it had approved the commencement of a formal due diligence process. Once it had received a binding offer, it said it would evaluate its options for the business.

The company's results for the six months to end-March are scheduled for release on 20 May. Its shares rose 1% to R217.59 yesterday.





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