Tiger Brands: Releases H1-2022 Unaudited Results

Johannesburg / ZA. (tbl) Performance of South Africa’s Tiger Brands Limited for the six months ended 31 March 2022 was impacted by a particularly poor first quarter, driven by significant volume declines in Bakeries and a protracted strike at Snacks + Treats. The poor performance of these businesses was compounded by challenges relating to the procurement of certain key raw materials and ingredients, as well as packaging availability and the inability to effect sufficient price increases to offset unexpected cost push. The group’s improved top line and profitability in the second quarter were insufficient to negate the poor start to the year.

Total revenue from continuing operations increased by 2 percent to ZAR 16,8 billion, driven by price inflation of 3 percent and partially offset by overall volume declines of 1 percent. Volume growth in Exports and International was offset by volume declines in the Domestic business, primarily attributable to Milling and Baking, Snacks + Treats as well as Home and Personal Care. The volume declines were somewhat offset by a strong volume recovery in Out of Home and good performances in Rice, Beverages and Groceries.

Although cost-saving initiatives and supply chain efficiencies have been accelerated and are delivering ahead of plan, these were not enough to counter the high level of input cost inflation, resulting in gross margin compression to 29,2 percent from 30,6 percent in the corresponding period last year. Group operating income (before impairments and non-operational items) decreased by 5 percent to ZAR 1,5 billion. Operating income for the current period includes insurance proceeds of ZAR 17 million in respect of last year’s product recall and ZAR 144 million in respect of the civil unrest which occurred in July 2021.

Income from associates increased by 3 percent to ZAR 182 million, with Carozzi and National Foods delivering improved revenue performances which were assisted by rigid control of costs.

Net financing costs for the period amounted to ZAR 34 million compared to ZAR 29 million last year. A net foreign exchange gain of ZAR 5 million resulted from the translation of foreign currency cash balances at a weaker average exchange rate. In the same period last year, there was a net foreign exchange loss of ZAR 56 million due to the strengthening of the rand against major currencies.

The group’s effective tax rate before non- operational items and income from associates decreased to 29,6 percent from 30,0 percent, largely due to adjustments in the current period in respect of special investment allowances claimed previously on qualifying capital projects. Earnings per share (EPS) from continuing operations decreased by 3 percent to 733 cents (2021: 755 cents) while headline earnings per share (HEPS) from continuing operations decreased by 2 percent to 729 cents (2021: 741 cents).

EPS from total operations decreased by 12 percent to 733 cents (2021: 837 cents) and HEPS from total operations decreased by 2 percent to 729 cents (2021: 741 cents). The significantly higher decrease in EPS from total operations for the six months ended 31 March 2022, relative to HEPS, is due to the inclusion in the prior period of capital profits and foreign currency translation releases, amounting to ZAR 135 million, in respect of discontinued operations.

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