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Tiger Brands in strategic review

Companies
Durban - South African consumer goods producer, Tiger Brands, said on Thursday that it was going to implement its new operating model to drive its growth objectives in the next financial year and beyond.

The group embarked on a comprehensive strategic review in 2016, which focused on delivering sustainable profitable growth. The group wants to focus on three areas: growing the portfolio, creating a cost conscious culture and an advantaged integrated supply chain, and an organisation structure designed for exceptional delivery.

Tiger Brands chief executive Lawrence Mac Dougall said the company operated in an intensely competitive industry where increasing market share against well-funded and established participants required the full commitment of an experienced and expert team working towards a clear strategy.

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Jungle Oats is one of the original products of Tiger Brands. Picture: Reuters

“The immediate priority is to rejuvenate the domestic business to deliver sustainable, profitable growth. Importantly, Africa and other emerging markets remain a key part of our growth strategy.

“We have refined our approach to our African strategy by exiting non-core categories in Kenya and Ethiopia. Looking ahead, we will prioritise core category opportunities based on market attractiveness, strategic fit and our right to win. Similarly, the role of associates will be reviewed continuously,” said Mac Dougall.

Tiger Brands reported a loss of $40.5 million (R527 million) in its Nigerian business in 2013 and this was followed by another loss of $34.3 million in 2014.

Read also: New strategy pays off for Tiger Brands

In December 2015, Tiger Brands sold its 65.7 percent stake in Flour Mills back to Dangote at $1 a share. This came three years after the company acquired Flour Mills from Dangote at the cost of $200 million.

Tiger Brands received an immediate cash injection of $46 million and took ownership of a debt of about $26.3 million.

The group released its results for the six months to end March in which it reported an encouraging growth at home.

Domestic operations contributed strongly to the group’s revenue base. Turnover in the domestic business increased by 8 percent to R14.3 billion, up from R13.2 billion, primarily driven by the grains division. Operating income increased by 15 percent to R2 billion, up from R1.8 billion as compared to the same period in 2016, while operating margins increased to 14.2 percent. The volumes in the domestic business declined by 4 percent, partly due to Easter volumes being included in the comparative period.

The overall group turnover from continuing operations was up 7 percent to R16.4 billion, while group operating income from continuing operations, impairments and abnormal items saw a 10 percent rise to R2.2 billion while headline earnings per share from continuing operations increased by 7 percent to 1036 cents a share.

The group declared an interim dividend of 378c.

Tiger Brand shared dipped 1.8 percent on the JSE to close at R392.

BUSINESS REPORT

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