JOHANNESBURG - Fast-moving consumer goods company Tiger Brands said yesterday that it was nervous about the uncertainty in the country.

Chief financial officer Noel Doyle said the group had managed to show resilience in the midst of challenging economic conditions and sustained subdued consumer spending.

“We have made good progress in the last 18 months, especially since the arrival of our chief executive Lawrence MacDougall, but the political uncertainty remains a concern in the country,” Doyle said.

In the year to September, the group increased its revenue 2percent to R31.3billion, while operating income was up 11percent to R4.6bn. Operating margins increased 110 basis points (bps) to 14.8percent.

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The group said this improvement was due to improved pricing strategies enhanced by good procurement and better cost control.

Intense competitor pricing activity and declining consumer confidence resulted in volumes declining 3percent. Cash generated from operations increased 43percent to R6.1bn, benefiting from improved working capital management.

Headline earnings a share increased 2percent to 2155cents a share, driven by the domestic performance and diluted by a disappointing performance from associates and the deciduous fruit business.

The company declared a final dividend of 1080c a share, up 1percent, compared with last year’s 1065c.

“Overall, we were happy about the results, but we think we need to improve on our biscuits division in Nigeria, which has not been performing well for the past 6 to 12 months. We were happy that we exited Ethiopia without any losses,” Doyle said.

Tiger Brands operates in a number of divisions. The grains division delivered 5percent revenue growth, while operating income increased 18percent to R2.4bn

The exports business grew revenue 7percent to R1.7bn, attributed to increased sales into the Democratic Republic of Congo and Mozambique. Operating income increased 10percent to R273million.

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David Lerche, a senior investment analyst at Sanlam Private Wealth, said Tiger Brands’ revenue growth of only 2percent was a bit disappointing, but the margin improvement of 150basis points to 15.6percent was encouraging and ahead of their estimates.

“This drove a strong 11percent rise in group operating income from continuing operations. The poor performance of the associates, particularly Oceana, meant that despite the rise in operating income, headline earnings a share were up only 2percent, which was below our expectations,” Lerche said.

He said Tiger Brands not only faced a tough environment, given the constraints on consumer spending, but also from continued high levels of competition in the food and groceries space.

“The margin improvement shows the group is doing well with the things it can control. It appears well-motivated under the leadership of Lawrence MacDougall,” Lerche said.

However, he added that the problem was that volume growth will be limited by the weak consumer and intense competition.

“The success or failure of the group’s capital allocation over the next three years is now the key variable given the recovery of the core operations,” he said.

Tiger Brands shares fell 1.45percent to close at R397 on the JSE yesterday.