SOUTH AFRICA – South African food manufacturing giant, Tiger Brands is seeking to launch a venture capital fund with an initial capital allocation of about R100 million (US$7.17 million), targeting food and beverage start-ups.
The fund, according to reports by Money Web, will be launched in June and it will majorly focus on its home market, South Africa.
The capital injection will also invest in technology sectors that are linked to areas which Tiger Brands operates in.
“It aims to give food and beverage start-ups the much-needed capital they require and also accelerate Tiger Brands’ involvement in emerging and existing consumer trends such as health and nutrition, plant-based foods and convenience,” said the company’s investor relations officer Nikki Catrakilis-Wagner.
The JSE listed packaged food processor has reported a 21% rise in half-year profit in the six months to March 31.
Headline earnings per share – the main profit measure – from continuing operations rose to 741 cents compared with 613 cents a year earlier.
“It aims to give food and beverage start-ups the much-needed capital they require and also accelerate Tiger Brands’ involvement in emerging and existing consumer trends such as health and nutrition, plant-based foods and convenience.”Tiger Brands investor relations officer – Nikki Catrakilis-Wagner
The strong result was helped by strong revenue growth in the first quarter while cost saving and efficiency initiatives gained traction across all segments of the portfolio.
The second quarter performance was interrupted when the government tightened its Covid-19 lockdown measures towards the end of 2020 during the second wave of the pandemic.
The owner of popular brands such as Jungle Oats, Albany bread and Tastic rice said revenue increased by 8% to R16.4 billion (US$1.18m), underpinned by price inflation of 9%. This was offset slightly by an overall volume decline of 1%.
The group was unable to fully recover the high level of agricultural commodity costs, placing “naked” margins under pressure. Naked margin is the difference between selling price and the raw material cost.
However, a steady improvement in manufacturing efficiencies resulted in the gross margin for the group remaining flat at 30.6%.
Tiger Brands operates grains, consumer brands, home and personal care (HPC) and exports and international divisions.
The food producer saw “meaningful” volume growth in both exports and international businesses, which was offset by volume declines in the domestic business, primarily attributable to out-of-home products.
According to IoL, the grains business reported a 10 percent increase in revenue to R7.5 billion (US$1.25 billion) and a 16 percent increase in operating income to R619m (US$44.39m), supported by the improved performances of the oat-based breakfast segment, rice and pasta.
In the HPC division, revenue increased by 6 percent to R1.1 billion (US$79m) and operating income was up by 15 percent.
The exports and international division reported an 18 percent increase in revenue to R1.8 billion (US$130m) while operating income increased by 58 percent to R85m (US$6m).
The consumer brands division reported a 4 percent increase in revenue while operating income was up by 19 percent.
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