Tiger Brands earnings slide 23% in 'disappointing' year
JOHANNESBURG - Tiger Brands on Friday reported a 23 percent drop in headline earnings per share for the year to September, while revenue edged up four percent to R29.8 billion in what it called a disappointing set of results.
The company however said in a year that had been catastrophic for many businesses in South Africa due to Covid-19, it had been in the fortunate position of playing a pivotal role in ensuring food supply during the initial lockdown in response to the pandemic which grounded non-essential services.
This allowed the company to support the livelihoods of its employees even when sites were temporarily closed in line with lockdown regulations. It also resulted in strong cash flow generation, further supporting Tiger Brands’ healthy balance sheet.
“Notwithstanding this, the results for the year have been disappointing, reflecting the challenges faced by the company in maintaining margins in what was an already difficult consumer environment before the onset of the Covid-19 pandemic,” Tiger Brands said.
The second half of the year was affected by the closure of non-essential facilities in line with Covid-19 regulations, the cost of complying with consumer and customer protection pricing regulations as well as the cost of health and safety measures.
“Furthermore, supply chain efficiencies were adversely impacted by temporary disruptions from Covid-19 infections at site level and within the supply chain,” the company added.
A dispute with a former distributor in Nigeria continued to adversely impact the performance of exports, hurting profitability from continuing operations in the second half.
However enhanced efficiencies, cost reduction measures as well as a revised operating model resulted in a significantly lower year-on-year decline compared with that reported in the first half.
Tiger Brands declared an ordinary final dividend of 537 cents per share for the year and, citing a healthy balance sheet, also declared a special dividend of 133 cents as a result of the once-off proceeds from the disposal of its Value-Added Meat Products business.
It predicted that the current significant economic downturn would persist over the near and medium term, and the anticipated volatility of the rand currency as well as rising levels of unemployment would negatively impact both the supply and demand dynamics of the business.
“Despite the challenging environment, the reconfiguration of our operating model, clear plans to compete effectively in a value economy as well as the successful execution of key strategic initiatives should position the group favourably to reverse the trend of declining profitability from continuing operations,” Tiger Brands added.
- African News Agency (ANA), Editing by Stella Mapenzauswa