Tiger Brands CEO Lawrence Macdougall. Picture: FREDDY MAVUNDA
Tiger Brands CEO Lawrence Macdougall. Picture: FREDDY MAVUNDA

As the deadly listeriosis outbreak loomed large over Tiger Brands’ first-half performance, lawyers representing victims of the disease on Wednesday said more potential claimants had reached out to them.

Tiger Brands, SA’s largest food producer with a market capitalisation of R43.7bn, is reeling from the effect of the listeriosis outbreak which left more than 200 people dead. As a result of the outbreak, the owner of the Enterprise, Bokkie and Oros brands recalled ready-to-eat processed meats such as polony and Viennas and closed four meat processing facilities.

The listeriosis and the sale of the firm’s 49.1-million shares in listed fishing company Oceana Group were the main factors in the 12% drop in Tiger Brands' headline earnings per share.

Tiger Brands’ value-added meat products (VAMP) business, which had to shut factories in the aftermath of the outbreak in March 2018, reported a R296m operating loss.

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The company said the relaunch of the operations experienced difficulties “which affected service levels”. Revenue from that business slumped 79% to R213m.

Dirk van Vlaanderen, associate portfolio manager for Kagiso Asset Management, said on Wednesday the financial effect of the listeriosis crisis continues to linger in the Tiger Brands results.

"With the Enterprise business now operational again, we would expect this business to trend towards break-even and then a return to profitability in the medium term. While difficult to gauge externally, one shouldn’t underestimate the level of management time that was required to deal with the crisis, which we believe had a detrimental impact on the remaining business units,” Van Vlaanderen said.

Tiger Brands has denied liability for the listeriosis outbreak and intends to fight the class action.

Catherine Marcus of law firm Richard Spoor Inc, the lawyers representing the listeriosis claimants, on Wednesday said they were waiting for Tiger Brands’ response to the summons.

“In the meantime, more people have reached out to us. So far a total of 640 people have come forward. But not all of them are victims of listeriosis,” Marcus said.

When it filed the summons, there were 500 people who were part of the lawsuit. She said more people could join the class action.

Ron Klipin of Cratos Wealth on Wednesday said the class action "is likely to be a drawn-out process”. .

Tiger Brands said total net profit in the first six months was 1% down at R1.4bn, while headline earnings fell 11% to R1.3bn. Revenue from continuing operations fell 2% to R15.4bn.

Revenue from exports and international operations fell 11% to R1.7bn because of lower export volumes and price deflation in international markets.

Tiger Brands CEO Lawrence MacDougall said the company expected the constrained consumer environment was likely to persist, with low price inflation also expected to last longer. “Days of price inflation being pushed to the consumer are gone,” MacDougall said.

The company declared an interim dividend of 321c per share, down 15% due to lower earnings. It also declared a special dividend of 306c per share from once-off proceeds received from the sale of its Oceana stake to Brimstone.

MacDougall said the company opted to declare the special dividend because it did not have a pipeline of investments lined up. “That is why we are returning the proceeds to shareholders,” he said.

Tiger Brands’ shares were unchanged at R230 on Wednesday.