JOHANNESBURG, SOUTH AFRICA — Tiger Brands Ltd.’s profit before tax for the year ended Sept. 30 increased 10% to R4.5 billion ($316 million) due to strong performances in groceries, beverages and home care. Grains experienced a marginal decrease because of significant declines in maize (corn).
Total earnings per share, including discontinued operations (TBCG), increased 90% to 2,034 cents, up from 1,068 cents a year ago. Group turnover from continuing operations increased 11% from R28.7 billion to R31.7 billion.
The year was characterized by high inflation in raw material input costs, primarily due to the prolonged drought and significant currency volatility. The impact was felt across the domestic portfolio, most notably in the Grains and Groceries divisions. Despite a marginal decline in the Grains division’s operating income, driven primarily by drought-related cost push in maize and sorghum, the performance of the balance of the domestic portfolio reflected strength of Tiger’s brands, the company said, with particularly strong performances from Groceries, Beverages and Home Care.
International (including Exports) reported a 19% increase in operating income. The performance was partially offset by lower profitability in Exports due to the challenging economic environment and foreign exchange liquidity issues in key markets, including Zimbabwe, Nigeria and Mozambique.
The group’s interest in Tiger Branded Consumer Goods plc (TBCG), formerly Dangote Flour Mills, was disposed of with effect from Feb. 25. Consequently, TBCG has been treated as a discontinued operation in the results.
In Grains, turnover increased 13% to R12.8 billion driven entirely by inflation. Despite growth in all other Grains categories, overall volumes were flat due to significant declines in maize. Operating income fell by 3% to R2 billion.
Turnover in Milling and Baking increased by 13% to R9.2 billion (2015: R8.2 billion), driven by high levels of inflation, particularly in maize and wheat. A disappointing performance from maize and sorghum resulted in operating income declining by 5% to R1.6 billion (2015: R1.7 billion). This contributed to a lower operating margin of 17.3% compared with the prior year of 20.6%. The wheat-to-bread value chain performed credibly in an increasingly competitive environment in both baking and wheat milling.
Other Grains delivered a strong result attributable to good performances from the pasta and oats categories. Turnover was up 13% to R3.6 billion (2015: R3.2 billion) and operating income of R406 million (2015: R380 million) was 7% higher.
Looking ahead, Tiger said the difficult trading environment is expected to persist with inflation levels remaining high. The anticipated benefit of lower soft commodity prices is only likely to be felt in the latter part of the year.
Tiger also said that board chairman Andre Parker has said he will not seek reappointment to the board at the annual meeting planned Feb. 21, 2017. Khotso Mokhele will succeed Parker as chairman following the conclusion of the meeting.
Parker was appointed to the board in August 2007 and has been chairman since 2012. Mokhele has been a director of Tiger Brands since 2007.
The company also announced the appointment of Emma Mashilwane and Kevin Hedderwick as independent, non-executive directors of the company, effective Nov. 23.
Mashilwane is a chartered accountant and has more than 12 years of experience in external audit, internal audit and advisory services. She is currently the head of internal audit and risk advisory services at Nkonki Inc. and previously held various senior positions both in audit and advisory and the position of chief financial officer in unlisted companies.
Hedderwick is the former group chief executive of Famous Brands Ltd. He joined Famous Brands Ltd. in 2000 and has had various executive positions before being appointed as group chief executive in 2010, a position he held until his retirement in 2016. He was subsequently retained as group strategic advisor for Famous Brands Ltd. responsible for all M&A activity.
As a consequence of the above changes, the participation of the non-executive directors on the various committees of the board has been amended, Tiger said.
The company also announced Mary-Jane Morifi has been appointed as group corporate affairs executive, effective Dec. 1. Morifi has extensive experience having recently led the global capital campaign for the Nelson Mandela Children´s Hospital Trust. She was previously the executive head of corporate affairs and executive committee member of Anglo American Platinum Limited and was a visiting fellow at Harvard University.
Neil Brimacombe, a member of the executive committee, has resigned and will leave the company on Jan. 31. Brimacombe currently holds responsibility for the home, personal care and baby operations, as well as exports and the international investments of Carozzi (Chile), Chococam (Cameroon) and UAC Foods (Nigeria). He has been with the company since September 2000 and has held a number of senior executive positions. An announcement with regard to the replacement for Brimacombe will be made in due course, Tiger said.