Tiger Brands expects 30% decline in full year earnings with recovery from listeriosis

SOUTH AFRICA – Tiger Brands has revised its profit warning and now expects headline earnings per share to fall by between 25% and 30% as the company struggles to recover from the listeriosis tussle, reports Business Day.

This is a revision from the 22% to 37% range it had earlier forecast for the year to end September.

Tiger brands attributed the decline to increase in cost of doing business as a result of currency movements, fuel price increases, labour settlements and higher administered costs.

It is also recovering from listeriosis outbreak that saw the company close some of its meat packaging facilities in the country.

The JSE-listed food company had issued a profit warning for its annual results in August due to the impact from listeria outbreak which prompted the closure of a polony meat factory owned by its subsidiary, and also because of cost pressures.

There was also the impact due to the recall of products and suspension of operations involving certain of the company’s value-added meat processing facilities following the listeria outbreak at a factory located at Polokwane and owned by its subsidiary Enterprise Foods.

Tiger also gave an outlook for its earnings excluding Haco Tiger Brands in which it sold a 51% stake to Kenyan multi-millionaire Chris Kirubi in February.

In its interim financial results for the six months ended March 2018, Tiger Brands said it had incurred a US$25 million loss because of the recall associated with its value-added meat processing.

The group recorded a 4% decline in revenue for the period to US$1.09 billion from US$1.14 billion, while operating income before impairments and ‘abnormal items’ declined 8% to US$140 million.

With the exemption of value-added meat processing, the group’s core domestic food businesses delivered a steady performance offset by intense competition and ongoing pressure on pricing as consumers continually search for value.

The packaged goods company re-opened its ready-to-eat meat processing facility, Enterprise Foods in Germiston, months after it was implicated as the source of the listeria outbreak.

It expects to open its other facility in Polokwane once it completes refurbishments as well as assessments with the health department in November.

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