DURBAN – The Listeriosis outbreak in South Africa came back to haunt Tiger Brands, with the group reporting a 26 percent decline in headline earnings per share (Heps) to 1 587 cents a share during the year to end September, while revenue fell 9 percent to R15.87.
The group said the outbreak and the country’s weak economy also saw its net profit slashed by 20.6 percent to R2.39 billion, while operating income fell to R3.3bn.
Tiger Brands pointed to the suspension of its value-added meat products (Vamp) due to the listeriosis outbreak as the reason for the sharp fall in its overall profits.
It also blamed the country’s technical recession, a sharp decline in the value of the rand, the VAT increase, rises in the cost of transport and essential services, and substantial increases in input costs as other factors that had a negative impact on consumer demand.
Chief executive Lawrence MacDougall said closing the Vamp plants had allowed the group to undertake refurbishments at its production facilities and allocate dedicated time for employee retraining.
The group said revenue had declined 9 percent to R28.5bn during the period, while headline earnings per share (Heps) fell 26 percent to 1 587 cents a share.
However, Tiger Brands still managed to declared a dividend of 1 080c a share – unchanged from last year.
It said temporary suspension of operations at the Vamp division in March 2018 accounted for 4 percent of the volume decline as well as abnormal losses of R421 million, which included the significant impact of the product recall of R380m, which is net of insurance recoveries.
MacDougall said Tiger Brands had decided to pursue an unbundling of its entire shareholding in Oceana Group.
The group’s shares, however, slugged off the results, rising to R286.95 from Wednesday’s closing price of R270.90. Tiger shares closed 4.84 percent higher at R284 on the JSE yesterday.
Jordan Weir, a trader at Citadel, said the results were worse than expected.
He said the listeriosis outbreak, together with the VAT increase and slowdown in consumer spending and demand, had pushed the group into the black.
He said Tiger Brands seemed focused on the growth and efficiency of its core business by selling a 42 percent stake in Oceana, which it felt was not aligned to its core operations and brands.