Tiger Brands - Results

Tiger Brands, the home of some of South Africa’s iconic food and household brands recently reported its annual results that coincided with a challenging period for consumers that had to contend with high inflation and high-interest rates. The highlights are as follows:
 

• Revenue up 10% to R34.0 billion
• Group operating income up 53% to R3.4 billion
• Headline earnings per share up 51% to 1 702 cps
• Final dividend up 29% to 653 cps, full-year dividend up 18% to 973 cps

Tiger Brands reported higher earnings and higher margins during a period marked by high food inflation which tends to favour food producers. Although volumes across its product categories were under pressure, the group could reprice their products and achieve higher margins. The total revenue growth of 10% to R34.0 billion was driven by price inflation of 11% and volume decline of 1%. The decline in volumes primarily stemmed from the group’s domestic operations, Milling and Baking, Snacks & Treats, Baby as well as Home and Personal Care. From a segmental reporting perspective, Grains revenue increased by 6% to R15.5 billion (inflation 9%, volumes -3%). Milling and Baking revenue increased by 5% to R10,6 billion (inflation 16%, volumes -11%). The group continues to experience volume pressure in Maize exacerbated by volatile raw material prices. Consumer brands revenue increased by 12% to R12.4 billion driven by Groceries revenue growth of 15% to R6.4 billion (inflation 11%, volume +4%), Snacks & Treats revenue increased by 4% to R2.4 billion (inflation 8%, volumes -4%), Beverage’s revenue increased by 11% to R1.8 billion (inflation 6%, volumes +5%), Baby revenue increased by 4% to R1.1 billion (inflation 11%, volumes -7%). Revenue for the Home & Personal Care segment declined by 5% to R1.9 billion, driven by Personal Care revenue growth of 4% to R672 million (inflation 12%, volumes -8%), which was offset by Home Care revenues which declined by 9% to R1.2 billion (inflation 8%, volumes -17%). Gross margins for FY2022 increased by 180 basis points on the prior year to 30.3%. The South African Reserve Bank forecasts local food inflation of 8.8% for 2022 and comes in at 6.2% in 2023 and 4.2% in 2024. The group’s suite of brands includes Albany, Koo, All Gold, Tastic, Jungle, and Purity, and is considering private-label production for retailers to contend with rising competition from retailer private brands as consumers deal with the rising cost of food, tending to trade down to affordable options.