Processed meats units continue to take toll on Tiger Brands
A slow recovery in the group’s listeriosis-hit value-added meats businesses ensured operating income fell by a fifth to end-September
Food producer Tiger Brands, which is still reeling from the backlash of the listeriosis crisis, said on Friday the slow recovery in its value-added meats businesses ensured operating income fell by a fifth in its year to end-September.
Tiger Brands, which is SA’s largest food producer, said headline earnings per share fell 17% to 1,349c during the year, with the company’s share price falling as much as 10.7% in morning trade on Friday.
Group operating income fell 20% to R2.6bn, but excluding the meats business and other writedowns, this would have fallen 11% to R3.2bn.
The company wrote down spice and beverage maker Davita’s goodwill by R212m, due to a challenging export environment.
The value-added meat businesses’s property, plant and equipment were written down by R96m.
The company is seeking to dispose of this business, with a listeriosis outbreak in 2018 leaving about 200 people dead, and leading the company to recall its processed meats and close four meat processing facilities. The company is also facing class-action lawsuits.
Tiger Brands, which also makes Oros juices, Tastic rice and Albany breads, declared total distribution for the year of 1,061c, down about 1.76% from the prior period. This includes a special dividend of 306c, related to the disposal of its interest in fishing-group Oceana.
Tiger Brands had completed the disposal of its 42% stake in Oceana to Brimstone during the period. The total sale consideration amounted to R581m, giving rise to a capital profit of R262m after tax, the company said in April.
The company has also disposed of Deli Foods in Nigeria, which had been in a loss-making position for a prolonged period. This process is expected to be completed in coming months.
The company said on Friday it had made significant progress in optimising its portfolio, with an update on the disposal of the value-added meat business expected soon.
“It is expected that the significant macroeconomic challenges facing the country are likely to persist for the foreseeable future. In the context of structural unemployment, ongoing challenges relating to state-owned enterprises and increased competitive pressure, the operating environment is likely to remain subdued,” the company said.
At 11.15am, Tiger Brands’s share price was down 5.26% to R219.70, having earlier fallen as low as R207.03. The company was on track for its worst one-day performance in just over a year.