Tiger Brands: Unaudited H1-2021 group results

Johannesburg / ZA. (tbl) South Africa’s Tiger Brands Limited delivered an improved financial performance for the six months ended 31 March 2021. The performance was supported by strong revenue growth in the first quarter of the financial year, whilst cost saving and efficiency initiatives gained traction across all segments of the portfolio, leading to positive operating leverage for the full six-month period.

Total revenue from continuing operations increased by 8 percent to ZAR 16,4 billion, underpinned by price inflation of 9 percent and offset slightly by an overall volume decline of 1 percent. Meaningful volume growth in both Exports and International was offset by volume declines in the Domestic business, primarily attributable to Out of Home, with some volume pressure also within Grains, other than the Oat-based breakfast business (Jungle). The volume declines were partially offset by strong performances in Baby and Home Care, and a solid recovery in Snacks + Treats.

The group was unable to fully recover the high level of agricultural commodity cost push, placing naked margins under pressure. However, this was mostly offset by a steady improvement in manufacturing efficiencies, resulting in the overall gross margin for the group remaining relatively flat at 30,6 percent. Group operating income (before IFRS 2 charges) increased by 16 percent to ZAR 1,6 billion, with the operating margin improving to 9,6 percent compared to 8,9 percent in the corresponding period last year

Income from associates increased by 12 percent to ZAR 177 million, with Carozzi and UAC Foods reporting improved trading performances. Despite increased volumes and rigid cost control, National Foods’ earnings in US dollar terms continue to be affected by the hyper-inflationary environment in Zimbabwe.

Net financing costs for the period amounted to ZAR 29 million, benefiting from lower interest rates and lower average net debt levels, due primarily to improved debtor collections. A foreign exchange loss of ZAR 56 million resulted from the significant strengthening of the rand against other major currencies, thereby negatively impacting the translation of foreign currency cash balances. In the same period last year, there was a net foreign exchange profit of ZAR 84 million.

The abnormal profit of ZAR 43 million at the half-year is attributable to the profit on sale of various non-core brands in the Personal Care division. The effective tax rate before abnormal items and income from associates, reduced from 30,6 percent to 30,0 percent.

EPS from total operations increased by 299 percent to 837 cents (2020: 210 cents) and HEPS from total operations increased by 52 percent to 741 cents (2020: 489 cents). The higher increase in HEPS from total operations for the six months ended 31 March 2021, relative to the increase of 21 percent from continuing operations, was primarily due to the losses recorded by VAMP in the prior period.

The relatively higher rates of increase in EPS from both total operations and continuing operations, compared to the equivalent increases in HEPS, are primarily due to the significant impairment charges of ZAR 557 million recorded in the same period last year, all of which related to continuing operations.

Segmental operating performance

Domestic revenue increased by 7,1 percent to ZAR 14,6 billion, underpinned by price inflation of 9,6 percent, less the impact of overall volume declines of 2,5 percent. With the exception of Out of Home, all domestic segments delivered positive revenue growth. Efforts to contain costs and improve production efficiencies resulted in positive operating leverage, with operating income before IFRS-2 charges increasing by 14 percent to ZAR 1,5 billion.


Revenue increased by 10 percent to ZAR 7,5 billion, reflecting average price inflation of 14 percent, offset by overall volume declines of 4 percent. Our ability to pass through some input cost inflation, as well as cost savings across the segment, resulted in operating income increasing by 16 percent to ZAR 619 million and the total operating margin improving to 8,3 percent from 7,8 percent in the comparative period. This result was underpinned by the improved performances of the Oat-based breakfast segment (Jungle), Rice and Pasta, which had particularly challenging results in the comparative period last year.

Milling and Baking increased revenue by 6 percent, influenced by 12 percent price inflation and an overall volume decline of 6 percent.

The wheat-to-bread value chain was characterised by exceptionally aggressive price-led promotional activity in the second quarter, especially in formal retail channels, as well as a decline in overall bread consumption and penetration. Maize was adversely impacted by the inability to fully recover underlying raw material inflation as well as an unfavourable product mix. Despite a pleasing recovery in sorghum-based beverages, the breakfast offering performed poorly, impacted by lower volumes and aggressive category pricing. Milling and Baking’s operating income declined by 4 percent to ZAR 477 million.

Other Grains recorded a significant recovery, driven primarily by Rice and Pasta, whilst Jungle achieved a pleasing performance.

Period-on-period revenue for the overall segment increased by 21 percent to ZAR 2,4 billion, largely driven by price inflation in Rice of 28 percent. Jungle’s performance was premised on the continued growth of its core oats offering, which benefited from increased in-home consumption. Higher volumes and lower conversion costs contributed to the improvement. Revenue growth in Rice was underpinned by price inflation and strong volume growth in the first quarter. This, together with an improved mix, resulted in a margin recovery relative to the comparative period. Although revenue growth in Pasta was modest, a marked improvement in factory performance, including a significant reduction in material usage variances, resulted in positive operating leverage.

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