TIGER Brands, South Africa’s biggest food products producer, had got off to a slow start in its new financial year, and revenue from continuing operations increased by only 1 percent in the four months to January 31, a trading statement said yesterday.
The group, which is also facing a class action case from listeriosis victims, said yesterday that industrial action had cost it R120 million over the three months to December 31.
The Snacks & Treats business was impacted by supply challenges due to an eight-week labour disruption in November and December, compounded by low opening stocks of finished products, because of the civil unrest in July 2021.
Although the Snacks & Treats business had made “significant progress” in restoring supply, it was anticipated that full supply would only be reached in July 2022, the group said.
Tiger’s share price fell 2.03 percent to R173 yesterday afternoon. The share price has drifted 25 percent lower over a year.
The group received R87m from Sasria in December, which related to stock losses and asset damages during the civil unrest in July. The payment represented about 50 percent of the total amount being claimed.
In the three months to December 31, group revenue from continuing operations fell 1 percent after the Bakeries division experienced “significant volume losses” due to competitor pricing competition, rising costs, and work stoppages in October and November.
Rice prices also fell due to lower international prices.
Excluding these categories, the balance of the portfolio delivered revenue growth of 3 percent in the three months, comprising 1 percent volume growth and price inflation of 2 percent.
There had been a marginal recovery in Snacks & Treats in January, as well as a slower rate of decline in Bakeries.
The global supply chain squeeze had caused challenges in managing raw material, ingredients and packaging availability, timeous supply, as well as significant cost increases.
The inability to pass through unanticipated cost push resulted in margin compression in the first quarter. This, however, was likely to be ameliorated in the second quarter as selling price increases were being implemented.
The focus on cost-saving initiatives and supply chain efficiencies was being accelerated. Distribution gains on product innovations were gaining traction.
On February 4, 2022 the Supreme Court of Appeal overturned the earlier order of the Gauteng Division of the High Court, which required various third parties to hand over epidemiological information relating to the listeriosis outbreak, in accordance with the subpoenas issued by Tiger Brands.
“It now remains for the parties to work towards completion of the pretrial preparations to get the matter ready for trial … Tiger Brands reiterates its commitment to ensure a resolution of the matter is reached in the shortest possible time, in the interests of all parties, particularly the victims of listeriosis,” the group said.
BUSINESS REPORT ONLINE