SOUTH AFRICA – Tiger Brands has made a commitment not to increase the prices of any of its products during the lockdown period despite incurring additional costs of R60million (US$3.22m) as a result of the incentives and staff transport arrangement during the 21-day shutdown.
Africa’s largest packaged goods company said that while the regulations allowed for price increases to be taken, which were supported by valid input cost increases, such price increases might not enhance profit margins beyond those prevailing for the three-month period up to February 29.
“This does have the effect of reducing the company’s ability to recover cost increases preceding this three-month period, where such price increases were deferred, or to fully recover year-on-year cost increases where price increases are normally scheduled to be taken annually or semi-annually,” the group said.
According to an IOL report, the company has kept its operations open during the lockdown, because its manufacturing and distribution sites have been identified as essential services, with workers heeding the call with 100percent attendance at work.
“This has allowed us to ensure that for the most part, with rice and pasta being notable exceptions, we have been able to meet all customers’ orders for key stock items. Unless we experience site closures due to staffing constraints or revised regulations, we anticipate being in a position to maintain consistent supply for the period of the lockdown as well as through the months of April and May,” the group said.
However, Tiger Brands said given the speed with which the Covid-19 was developing, there was uncertainty around its ultimate impact.
“Consequently, the overall impact on our financial and operating performance cannot be reasonably estimated at this time,” Tiger Brands said.
In other related updates, the world’s largest brewer, AB InBev, intends to save about €1bn (US$1.09bn) by proposing halving its final dividend as it battles uncertainty due to the Covid-19 pandemic.
The group has now proposed a final dividend of 50 euro cents (US$0.55) per share for its year to end-December, having previously proposed a dividend of €1 (US$1.09) per share.
This will be put to shareholders during its AGM on June 3, which has been rescheduled from April 29.
In March, AB InBev withdrew its guidance of up to 5% core profit growth in its 2020 year due to the spread of the virus across the globe.