Tiger Brands: The place did all of it hotfoot base? 

By Investment Correspondent, Justin Rowe-Roberts

South Africa’s biggest food producer Tiger Brands has prolonged been generally known as a excessive-quality, blue-chip company that’s held by a different of top local asset managers. Tiger Brands homes labels comparable to Jungle Oats, Albany and All Gold and is considered simplest-in-class within the sphere, in spite of the likes of AVI possessing a bigger observe portray. The defensive nature of the change is a optimistic plus for chance-averse traders; nonetheless, dire capital allocation and product quality disorders have destroyed shareholder price over the past five years. Even more relating for traders is that inflationary pressures due to unparalleled monetary easing have place well-known stress on input price. Though its producers are successfully cherished by shoppers, it’s no longer repeatedly straightforward to pass the inflationary pressures on to the patron. Analysts are changing into more and more concerned inflation won’t be ‘transitory’ in nature. This approach inflation will savor better for longer and shall be adverse for margins and earnings. One more notify, on top of many others.

Comparing Tiger Brands 2021 numbers to 2016’s paints a bleak list. Earnings is a limited bit lower however, more alarmingly, headline earnings per part – the corporate’s fundamental measure of performance – is down by spherical 50%. Though Tiger Brands spun off its 42% stake in Oceana at some level of the length below review, no longer being able to grow its topline over a five-yr length leaves remarkable to ponder. But the place did all of it hotfoot base? 

In 2011 and 2021, administration decided to embark on an African growth tale. Most of the administration teams on the JSE, in plenty of industries, had a identical thought. Nigeria modified into a stupendous jurisdiction with the nation’s excessive growth rates. In 2011, Tiger Brands purchased a 49% minority stake in UAC Foods and, in 2012, a 65.7% stake in Dangote Industries; both Nigerian-based agencies. Many JSE-listed counters have misplaced money in Africa and Tiger Brands is no longer any exception. The stakes of both agencies have since been equipped. At some stage in this time, administration’s focal level on growth resulted in a in vogue decline in its producers, which have continued to lose market part over the past few years. 

The listeriosis outbreak in 2018 brought about gigantic monetary and reputational wretchedness to the food producer. What modified into regarded as an idiosyncratic occasion, modified into clearly no longer. Beautiful weeks ago, the corporate presented it had been hit by yet every other product quality scandal. Millions of canned vegetable products have been recalled and, with the corporate already mired in litigation following the listeriosis outbreak, it has hit yet every other hurdle. 

When will the tide turn?

Tiger Brands Media Unlock: 

Tiger Brands’ improved operational performance for the yr ended 30 September 2021 modified into offset by the costs of the product remove and civil unrest

Salient Aspects*

⋅ Total Earnings increased by 4% to R31.0 billion

⋅ Earnings excluding the product remove and civil unrest increased by 5% to R31.2 billion

⋅ Group operating earningsdeclined by 10% to R2.2 billion

⋅ Group operating earningsexcluding the product remove and civil unrest increased by 20% to R3.0 billion

⋅ Group operating margindeclined to 7.2% from 8.3%

⋅ Group operating marginexcluding the product remove and civil unrest increased to 9.5% from 8.3%

⋅ EPS increased by 21% to 1 070 cents per part

⋅ HEPS declined 6% to 1 127 cents per part

⋅ Total Dividends increased 23% to 826 cps

*From persevering with operations – in line with the previous yr, Cost Added Meat Merchandise has been treated as a discontinued operation Earlier than impairments and non-operational objects


This yr, Tiger Brands joins a savor community of South African firms that have well-known their centenary. The corporate has come a mighty distance since initiating out as a diminutive family enterprise in Newtown, Johannesburg, to modified into Africa’s biggest listed producer of rapid-transferring consumer items, with trusted producers that manufacture part of every South African’s shopping basket. Though, the past few years have presented in particular excessive ranges of volatility and uncertainty, with altering production and consumption patterns and lengthening social, financial and environmental pressures, all of which have been exacerbated by the Covid-19 pandemic, our longevity reflects the corporate’s resilience, the inherent energy of our producers and the quality of our of us.

Impressed by our stable history, our strategic priorities are aimed at bettering the performance of our core portfolio while positioning the corporate for sustainable very prolonged time length growth.

Tiger Brands’ outcomes for the yr ended 30 September 2021 replicate in vogue development against our strategic priorities with an improved underlying performance from the core enterprise, negated by the costs linked to the product remove and the civil unrest that took space in July 2021. These costs amounted to R732 million (pre-tax).

The write-off of inventory linked to the civil unrest (R85 million), to boot to the product remove (R308 million), has been accounted for thru price of sales. Customer refunds linked to the product remove have been accounted for as an excellent purchase in earnings, even as other remove linked costs have been accounted for thru the relevant expense functions within the earnings assertion.

Thru the community’s underlying performance, the yr below review can even be characterised as a yr of two halves, with a stable first half of result, pushed primarily by a stable first quarter, offset partly by slower top line growth within the 2d half of. No matter earnings challenges, price savings and efficiency initiatives have been sustained, ensuing in clear operating leverage for the pudgy yr.

Total earnings from persevering with operations (sooner than the affect of the product remove and civil unrest) increased by 5%, underpinned by tag inflation of seven%, which modified into partly offset by an total volume lower of 2%. Since the costs linked to the product remove and civil unrest, operating earnings from persevering with operationsdeclined to R2.2 billion from R2.5 billion the previous yr. Sinful margin and operating margin declined to 28.5% (2020: 30.1%) and 7.2% (2020: 8.3%), respectively. Apart from, bare margins got right here below stress consequently of the excessive level of agricultural commodity price push no longer being fully recovered thru selling tag will increase. Nonetheless, this modified into offset by a in vogue growth in manufacturing efficiencies, ensuing in a marginal growth of total atrocious margins (excluding the product remove and civil unrest) to 30.3% from 30.1% within the prior yr. Operating income0F (excluding the product remove and civil unrest) increased by 20% to R3.0 billion.

Earnings per part (EPS) from persevering with operations increased by 21% to 1 070 cents (2020: 886 cents), even as headline earnings per part (HEPS) from persevering with operations declined by 6% to 1 127 cents (2020: 1 196 cents).

EPS from total operations increased by 87% to 1 142 cents (2020: 612 cents), and HEPS from total operations increased by 20% to 1 127 cents (2020: 940 cents).

The community’s statements of monetary bag 22 situation for the years ended 30 September 2020 and 30 September 2019 have been restated to greater replicate the necessities of IFRS 15 by offsetting a fraction of the community’s rebate liability against change and other receivables. Apart from, there modified into a restatement within the earnings assertion for the yr ended 30 September 2020 referring to to the disclosure of non-operational objects to greater replicate the presentation necessities of IAS 1. This change had no affect on EPS and HEPS reported for the yr ended 30 September 2020.

Document of the fair auditors

Ernst & Young Inc., Tiger Brands Restricted’s fair auditors, have audited the consolidated monetary statements of Tiger Brands Restricted from which the summarised consolidated outcomes have been derived. The auditors expressed an unmodified conception on the consolidated monetary statements. The consolidated monetary statements and auditor’s portray, in conjunction with the significant audit matters, are on hand on the Firm’s web page www.tigerbrands.com.

Board Committee Assignments

Shareholders are referred to the Firm’s audited community outcomes and dividend declaration for the yr ended 30 September 2021.

Apart from, shareholders are suggested of the next committee appointments:

• Following the resignation of Mr Ian Burton from the board in June 2021, Ms Geraldine Fraser-Moleketi is appointed chairman of the investment committee with accomplish from 19 November 2021.

• Following the retirement of Ms Maya Makanjee with accomplish from 31 December 2021, Ms Emma Mashilwane shall be appointed chairman of the social, ethics and transformation committee, with accomplish from 2 January 2022.

• Following the retirement of Mr Imprint Bowman on the corporate’s annual overall assembly on 16 February 2022, Mr Donald Wilson shall be appointed chairman of the remuneration committee with accomplish from 17 February 2022.

Declaration of remaining dividend

The Board has declared a remaining bizarre dividend of 506 cents per part for the yr ended 30 September 2021. This, along with the intervening time bizarre dividend of 320 cents per part, brings the total dividend for the yr to 826 cents. In survey of the corporate’s ungeared stability sheet and stable cash generating capacity, it has been decided to settle this yr’s total dividend on the corporate’s adjusted headline earnings. As a result, HEPS modified into adjusted to exclude the affect of the product remove and the civil unrest, which took space in July this yr. The Firm’s dividend coverage of 1.75x duvet has therefore been utilized to HEPS after the aforementioned modifications.

Per paragraphs 11.17 (a) (i) to (x) and 11.17 (c) of the JSE Listings Requirements, the next extra knowledge is disclosed:

• The bizarre remaining dividend has been declared out of earnings reserves

• The local Dividends Tax price is 20% (twenty p.c) efficient 22 February 2017

• The atrocious remaining dividend amount of 506.00000 cents per bizarre part shall be paid to shareholders who are exempt from the Dividends Tax

• The catch remaining dividend amount of 404.80000 cents per bizarre part shall be paid to  shareholders who are accountable for the Dividends Tax

• Tiger Brands has 189 818 926 bizarre shares in area (which comprises 10 326 758 treasury shares)

• Tiger Brands Restricted’s earnings tax reference amount is 9325/110/71/7.

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