Tiger Brands’ profits fall by 65% impacted by US$32m impairment charges

SOUTH AFRICA – Tiger Brands’ headline earnings per share from continuing operations for the six months ended March 31 fell to 501 cents, from 773 cents in the same period last year reflecting a 35% decline.

The company has reported a 75 percent decline in earnings per share to 221cents, impacted by R557m (US$32m) impairment charges.

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According to the food manufacturing giant financials, pretax profit from continuing operations fell 65% to R673 million (US$38m).

“The group’s overall performance reflects the difficult trading environment and the challenges faced, particularly within grains, groceries, Value Added Meat Products (VAMP) and exports,” Tiger Brands said in a statement.

Group revenue from continuing operations increased by 2% to R15.7 billion (US$903m).

However, group operating income dropped by 29%, with operating profit margins declining to 7%, impacted by lower volumes, raw material and conversion costs rising ahead of inflation and increased marketing investment, reports iol.

“These costs, together with the effect of government regulations on pricing during the national disaster period, may have an impact in excess of R500 million (US$28.7m) on profitability (in the second half),” the company said.

The food manufacturer has slammed brakes on declaring interim dividend in order to preserve cash, adding that it would re-consider an annual dividend at the end of the year depending on the group’s trading performance.

In addition to that, the owner of Jungle Oats is looking at “significant” job cuts, Chief executive Noel Doyle told reporters in a media call.

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“We are prioritising the building of adequate stock cover to cater for the possibility of potential disruptions to the supply chain and ensure the consistent availability of our products,” he said.

“In the short to medium term, cognisant of a constrained consumer, we will prioritise innovation towards value offerings, while re-engineering our business to optimise costs and improve efficiencies,” he added.

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