Johannesburg / ZA. (tbl) South Africa’s Tiger Brands Limited, the JSE-listed manufacturer of leading consumer brands, navigates tough trading environment, sluggish economy to deliver strong operating performance, the company said in a news release.
«It is indeed pleasing to announce that Tiger Brands has again been able to deliver a relatively healthy set of results, especially in the context of the political and economic uncertainties that South African’s have endured this year and the impact that this has had on consumer confidence», said Lawrence Mac Dougall, Tiger Brands’ Chief Executive Officer. Mac Dougall was reflecting on the company’s annual financial results for the year ended September 2017.
The company’s performance was driven by revenue growth of 2 percent to 31.3 billion ZAR and 11 percent operating income growth, before IFRS 2 charges, to 4.6 billion ZAR. Operating margins increased by 110 bps to 14.8 percent. «These results are underpinned by improved pricing strategies, momentum from our centralised procurement hub and intensified cost control», said Mac Dougall.
The South African domestic business posted an increase in revenue of 4 percent to 27.1 billion ZAR and operating income of 15 percent to 4.2 billion ZAR, before IFRS 2 charges. Cash generated from operations was up 43 percent to 6’1 billion ZAR, benefiting from improved working capital management. However, the tough trading environment was evidenced by a 3 percent decline in volumes.
Mac Dougall assumed the role of Chief Executive Officer at Tiger Brands in May 2016. Since his arrival, the company has been intensely focused on reviewing and developing its new 5-year corporate strategy and operating model.
The new operating model was implemented on 01 October 2017 and seeks to build distinctive capabilities required to win with consumers, customers and business partners.
«The benefits of a renewed organisational culture, one that is characteristically performance driven and cost-conscious can already be observed across many areas of the business», said Mac Dougall.
«In challenging times, the inclination of many companies is often to cut back on marketing investment», said Mac Dougall. «Tiger Brands has sustained investment behind our winning brands, which has contributed toward the business’ continued strength in the local market». Brands like All Gold, KOO, Tastic, Enterprise and Albany have retained their market-leading positions and are well-entrenched with consumers, winning for example, top honours in the Sunday Times 2017 Top Brands Survey.
Headline earnings per share from continuing operations was up 2 percent to 2 155 cents.
The company has declared a dividend of 702 cents per share for the year ended 30 September 2017. This, together with the interim dividend of 378 cents per share, brings the total dividend for the year to 1 080 cents. This is an increase of 1 percent on last year’s total dividend of 1 065 cents.
In addition to shareholders, the dividend will provide support to Tiger Brands’ social beneficiaries and the Tiger Brands Foundation. In 2017, Tiger Brands set aside 35 million ZAR for its Socio Economic Development (SED) initiatives, conducted in partnership with 13 NGOs and 4 universities. «Our internal SED activities allow us to provide food and nutrition security to over 40’000 people every month across South Africa», said Mac Dougall.
A further 63’699 learners from impoverished communities across the country are provided with a hot, nutritious breakfast each school day through the Tiger Brands Foundation, in support of improving the educational outcomes of learners through nutrition. The Foundation directly draws its budget from dividends declared by Tiger Brands and celebrated its 50-millionth meal served during the year.
The company has also ramped up its activities to increase opportunities for previously marginalised smallholder farmers to participate directly within its supply chain, contributing to economic transformation and poverty reduction through the development of the agri-sector. «In 2017 alone, we sourced 25’000 tons’ worth of produce from our smallholder farmer development programme».
«Collectively, these programmes make tangible our strategic purpose – to nourish and nurture more lives every day», said Mac Dougall.
«With a compelling strategy and clear targets, we will be able to win with consumers and grow the strength of our brands for the benefit of all our stakeholders», continued Mac Dougall.
He said that while the group was on a stronger footing, increasing competition in the domestic market, low consumer confidence and stubbornly high unemployment levels would continue to present a challenge. However, Mac Dougall is confident the group is well positioned to navigate this environment and pursue profitable volume growth.
«This will be achieved by improving market share in all the areas where we operate through enhanced and focused brand support, a re-energised approach to innovation, as well as by investing and growing with our customers», said Mac Dougall. «We will continue to focus on driving efficiencies and cost savings to improve operating margins and provide the fuel for our growth».
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