Tiger Brands registers decline in full-year profit despite 4% rise in revenue

SOUTH AFRICA – South African food manufacturing giant, Tiger Brands has reported a 4% rise in revenue for the year ended September 30, 2020 from R28.5 billion (US$1.85 billion) registered in 2019 to R29.79 billion (US$1.93 billion).

However, its profit for the year fell from R3.8 billion (US$246.6 million) to R1 billion (US$64.8 million) due to SA’s strained economy, the national lockdown and the impact of Covid-19, reports Fin24.

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“The results for the year have been disappointing, reflecting the challenges faced by the company in maintaining margins in what was an already difficult consumer environment before the onset of the Covid-19 pandemic,” said its CEO Noel Doyle.

The food group’s operating income declined by 18% to R2.6 billion (US$168.72 million), from R3 billion (US$194.68 million) of the previous corresponding period and its headline earnings per share decreased by 29% to 940 cents from 1 322 cents in last year.

The company’s sales and distribution expenses, marketing expenses and cost of sales were also on the rise, reducing its earning margins.

In the year ahead, the JSE listed firm is targeting cost savings of R500 million (US$32 million), as revealed by Noel in an interview with Reuters.

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To this end, the owner of popular brands Jungle Oats and Tastic rice said it had concluded a sale agreement for some of its brands as it intends to focus its investment behind some core brands.

“The results for the year have been disappointing, reflecting the challenges faced by the company in maintaining margins in what was an already difficult consumer environment before the onset of the Covid-19 pandemic.”

Tiger Brands CEO – Noel Doyle

Outlining a brief growth plan, Doyle said Tiger Brands will look at different models that include joint ventures, venture capital and earning revenue from licensing its brands.

Recently, the company finalized the sale of its value-added meat products business, Enterprise to Silver Blade, a subsidiary of Country Bird Holdings.

Other than the sale of the Vamp business, the food company also entered into a deal to sell its abattoir business at Olifantsfontein to Molare Proprietary Limited, one of South Africa’s largest pork processors.

The firm is also looking at e-commerce opportunities to monetise on the demand and will start with a pilot project to sell one of its products directly to consumers via online shopping as opposed to retail clients.

Doyle said that a lot of the savings for the 2021 financial year, which began in October, are expected to come from improved efficiency in factories, utility costs, negotiating better terms with suppliers and from alternative sourcing.

So far, the group has cut its staff by 400 to reduce costs.

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