Consumer goods companies take strain
Consumer goods companies have shown greater margin compression than growth in the most recent six-month reporting period
CONSUMER goods companies have shown greater margin compression than growth in the most recent six-month reporting period. A survey released this week by Ernst & Young (EY) attributes this to financial pressure: a squeezed consumer, a tough economy, and unpredictability. EY tracked 13 consumer goods, spanning diversified companies, food producers, and beverage and sugar producers with collective revenue of R180 billion. The survey includes Tiger Brands, AVI, Distell and Pioneer Foods. It's the first time EY has done this survey, and it plans to create industry benchmarks to track trends. The companies' most recent six-month reports were used for analysis. "If SA Inc were a company, it would probably have to issue a trading statement every week," said Derek Engelbrecht, EY's consumer products and retail sector leader. Though margin growth was positive on average, more companies were squeezed and eight of the 13 endured contractions in their margins. Engelbrecht said some outliers were...
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