Tiger Brands hit by strikes and tough market conditions
Strikes, a shrinking market and aggressive competition in the snacks and treats sector were among the reasons Tiger Brands gave for flat sales and lower profits for its 2017 financial year.
The fast-moving consumer goods group reported on Monday morning that revenue grew 2.3% to R31.3bn while net profit declined 5.5% to R3bn during the year to end-September.
Tiger Brands maintained its final dividend level at R7.02 per share. Since it raised its interim dividend to R3.78 from R3.63, its total dividend for the year of R10.80 was 1.4% higher than the prior year’s R10.65.
Revenue from the group’s domestic operations grew 3.6% to R27bn, representing 85% of the group’s total.
Its exports and international divisions suffered a 5.4% decline in revenue to R4.2bn.
Tiger Brands said its deciduous fruit exports suffered from a stronger rand, resulting in its operating income crashing 91% to R13.2m from R147.6m.
Falling grain prices helped the group grow its bread sales.
Tiger Brands said its beverages division suffered from industrial action, drought-related water restrictions and electricity disruptions in the first six months.
The second-half recovery was insufficient to offset the difficult start to the year. Revenue declined by 9% to R1.2bn, while operating income reduced by 8% to R144m.
"The outlook for this business is encouraging with the launch of Oros ready-to-drink gaining momentum," the results statement said.
Its snacks and treats division suffered a 5% revenue decline to R2.2bn due to "industrial action, a contracting market, aggressive competition and a product rationalisation exercise".
"However, an improvement in gross margins resulted in operating income increasing marginally to R324m.
"The new Heavenly aerated chocolate slabs were launched in the second half of the year and were well received by both consumers and customers.
"Snacks and treats will focus on volume recovery in the year ahead."