Tiger Brands reports lower sales in wake of the listeriosis crisis
Tiger Brands, which was named as the culprit in the 2018 listeriosis outbreak, says sales in the six months to end-March edged lower because of a slump in processed-meat sales and weak revenues from outside SA.
The food producer’s shares have lost 42% of their value since it was blamed for the deadly listeriosis outbreak in March 2018. The group now faces a class-action lawsuit, which it plans to defend.
Tiger Brands said on Wednesday revenue from continuing operations fell 2% to R15.4bn in the half-year to end-March. Excluding value-added meat products, revenue rose 4%.
The value-added meat products business, which had to shut factories following the listeriosis outbreak, “was impacted by challenges in managing the factory’s reopening and product launch logistics, which affected service levels”.
Revenue from that business plunged 79% to R213m.
Tiger Brands said total net profit was 1% lower at R1.4bn, while headline earnings fell 11% to R1.3bn.
“The trading environment remained difficult, with continued pressure on consumer spending, resulting in sales volume increases in the domestic business while low price inflation impacted margins,” the group said.
Domestic revenues, excluding processed meats, were 6% higher, driven by 2% volume growth and 4% inflation.
But revenue from exports and international operations fell 11% to R1.7bn because of lower export volumes and price deflation in international markets.
Tiger Brands said it wrote off goodwill of R100m in beverages and seasoning business Davita.
“This arose as a result of the consistent risks associated with key export markets, with lower sales projected for Nigeria and Mozambique, as well as lower sales forecasted for the powdered seasoning brand, Benny.”
The group said it plans to review its processes, structures and overhead costs to identify opportunities to cut costs.
“Selling-price inflation across the portfolio is expected to remain low against a backdrop of constrained consumer spending,” it said.
Pioneer Foods said on Monday its earnings fell in the six months to end-March as costs rose faster than sales.
Meanwhile, Tiger Brands said in a separate statement its earnings per share for the full year to end-September will rise by more than 20% thanks to the unbundling of its stake in Oceana Group.
The unbundling yielded an unrealised fair-value gain of R1.6bn. This gain would be excluded from headline earnings.