Tiger Brands net profit down 5.5% as strikes, tough market take a toll

Boxes of Jungle Oats, one of South Africa's Tiger Brands original products, sit on a shelf in a Cape Town convenience store, November 19, 2015. REUTERS/Mike Hutchings/File Photo

JOHANNESBURG – Strikes, aggressive competition in the snacks and treats sector and a shrinking market were among the reasons Tiger Brands gave for flat sales and lower profits for its 2017 financial year.

The group reported on Monday that revenue grew 2.3% to R31.3 billion while their net profit took a decline 5.5% to R3 billion during the year to end-September.

Tiger Brands maintained its financial dividend level at R7.02 per share. Its total dividend for the years of R10.80 was 1.4% higher than the prior year’s R10.65, since it raised its interim dividend to R3.78 from R3.63.

The group admitted that its deciduous fruit exports suffered from a stronger rand. This resulted in its operating income crashing 91% to R13.2 million from R147.6 million.

But falling grain prices helped the group grow its bread sales. They also said their beverages division suffered from industrial action, drought-related water restrictions and electricity disruptions in the first six months.

The groups snacks and treats division suffered a 5% revenue decline to R2.2 billion which was due to “Industrial action, a contracting market, aggressive competition and a product rationalisations exercise”

“However, an improvement in gross margins resulted in operating income increasing marginally to R324 million. The new Heavenly aerated chocolate slabs were launched in the second half of the year and were well received by consumers”.

“Snacks and treats will focus on volume recovery in the year ahead.”

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