DURBAN - Tiger Brands said on Friday that it expected its full-year earnings to decline by as much as 40 percent because it performed poorly in the first half of its financial year as a result of the Covid-19 outbreak and restructuring costs.
The fast-moving consumer goods company expected its headline earnings per share (Heps) from total operations for the year to the end of September to decline by between 35 and 40 percent, or between 460 cents and 532c a share, down from last year’s Heps of 1 322c.
Its earnings per share (Eps) from total operations were expected to fall by between 76 and 79 percent, or between 1 771c and 1 843c, down from last year’s Eps of 2 333c.
“The ranges reflect the poor first-half performance, but include an improved underlying performance expected in the second half, offset by the impact of Covid-19-related costs, as well as restructuring costs estimated at approximately R70 million as a result of adopting a fit-for-future operating model,” the group said.
Tiger Brands said the decline in Eps compared with Heps was largely due to the surplus of R2 billion arising from the fair-value gain relating to the unbundling of the company's interest in Oceana Group Holdings last year, including the capital profit realised on the disposal of the company’s residual shareholding in Oceana.
Tiger Brands disposed of its 42 percent stake in Oceana to Brimstone, for R581m in 2019.
The group’s performance for the quarter to the end of June improved, boosted by the impact of strong volume growth, particularly in the rice, pasta, breakfast oats, groceries, and home and personal care categories.
Revenue from continuing operations for the three months rose by 11 percent to R7.2bn. “This consisted of 4 percent volume growth, 5 percent price inflation, and a positive foreign exchange impact of 2 percent. However, operating income declined marginally, due mainly to Covid-19-related costs,” the group said.
The group reported an estimated R255m in Covid-19-related costs for the six months to September.
“In addition, the impact of price increases foregone as a consequence of the company's commitment to support the government's efforts and the cost of complying with the consumer and customer protection and national disaster regulations is estimated to be R175m for the three months to June and a further R127m for the three months to September. This is significant when compared with an operating profit from continuing operations in the corresponding six-month period last year of R1.4bn,” the group said.
Tiger Brands announced that its chairperson, Dr Khotso Mokhele, would step down with effect from December 31. Mokhele served as an independent non-executive director from August 2007 before being appointed chairperson in February 2017.
He will also relinquish his positions as a member of the nomination and governance, remuneration and investment committees.
“The board has appointed Geraldine Fraser-Moleketi as independent non-executive director and chairperson-designate, effective September 1, to facilitate a smooth handover. She will assume the role of chairperson with effect from January 1, 2021,” the group said.
Tiger Brands shares closed 0.99 percent higher at R177.26 on the JSE on Friday.
BUSINESS REPORT