Tiger Brands: faces a tough financial year

Johannesburg / ZA. (tbl) Tiger Brands Limited faces a tough financial year as the South African consumer continues to keep the reins tight, but chief executive Peter Matlare plans to increase the company´s volumes to boost earnings.

The 30 billion ZAR consumer goods group behind Golden Cloud flour, Albany Bakeries and Morvite breakfast snacks reported an eight percent increase in turnover for the year to September, but flat volumes growth in the fast-moving consumer goods (FMCG) categories would continue until the middle of next year, according to a press release.

Although the group said the period under review was characterised by strong performances in most of the categories, underlying consumer demand had weakened marginally in the second half of the financial year.

«In the second half of the year we did start to see an encouraging trend of a reduction in the rate of inflation extend across most categories», Matlare said in a statement. Operating income for the year (excluding Oceana) rose 28 percent to 3,05 billion ZAR.

The group said it wanted to boost its balance sheet so that it could continue looking for new growth opportunities. In the past year, Tiger Brands disposed of its interests in Adcock Ingram and Sea Harvest and spent 29,8 million ZAR in its unsuccessful attempt to acquire rival AVI.

The FMCG business increased turnover by twelve percent to 19,7 billion ZAR, largely due to a robust first half as turnover increased only one percent in the second six months. Matlare said in the release that this reflected the effect of the significant price deflation in food commodities and a weaker trading environment. «We have managed to maintain our market position, but we have to focus on how we can stimulate volumes».