Tiger Brands still reeling from listeriosis aftershock
DURBAN – Tiger Brands continued to feel the effects of the listeriosis outbreak in the year to the end of September after the food producer suffered an impairment charge in its value-added meat products (Vamp), following a slower-than-anticipated recovery in the division.
The group said on Friday that the impairment charge was driven by a R96 million write-down in respect of the Vamp’s property, plant and equipment and a R212m goodwill impairment related to Davita, reflecting the challenging outlook in export markets.
As a result, the group’s operating income before impairments and abnormal items declined by 20 percent to R2.6 billion.
“Excluding Vamp, operating income before impairments and abnormal items decreased by 11 percent to R3.2bn,” the group said.
Looking ahead the group was considering disposing of its value-added meat products.
“Significant progress has been made in terms of optimising the portfolio, with firm decisions having been made in respect of Vamp and Deli Foods. With respect to the potential disposal of Vamp, the formal due diligence process is under way and further updates will be given as key milestones are reached. The ongoing work to optimise Tiger Brands’ portfolio will ensure that the group is appropriately positioned for growth,” the group said.
Deli Foods in Nigeria was treated as a discontinued operation in the results, with a reported loss of R52.5m.
The group said its results reflected difficult trading conditions characterised by an increasingly challenging consumer environment and input costs rising ahead of price inflation.
“The overall result was significantly impacted by ongoing margin compression across the grains portfolio, tough trading conditions in the group’s primary export markets, and the slower-than-anticipated recovery of the VAMP business. The unbundling of the company's investment in Oceana also had a significant impact on year-on-year comparisons,” the group said.
Tiger Brands disposed of its 42 percent stake in Oceana to Brimstone, for R581m during the year.
Despite the challenging backdrop, total revenue from continuing operations increased by 3 percent, driven by price inflation of 5 percent and partially offset by an overall volume decline of 2 percent.
Headline earnings per share from continuing operations declined by 17 percent to 1 349 cents a share, while earnings per share from continuing operations increased by 55 percent to 2 364c, due to a capital surplus amounting to R2bn, arising from capital profits realised and a fair value gain relating to the unbundling of the company's interest in Oceana.
The group declared a gross final cash dividend of 434c to take the total dividend to 755c after an interim dividend of 321c was declared.
The group said in terms of its Africa growth strategy, it was looking to deliver organic growth by driving category growth through targeted brand investments, developing superior routes to market and investing in enabling capabilities.
Tiger Brands closed 6.56 percent lower at R216.69 on Friday.