Wrap Text
Unaudited Group results for the six months ended 31 March 2020
Tiger Brands Limited
'Tiger Brands' or 'the Company'
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
Share code: TBS ISIN: ZAE000071080
Tiger Brands unaudited Group results for the six months ended
31 March 2020
Tiger Brands grows revenue under difficult trading conditions
Salient features
From continuing operations
* Revenue up 2% to R15.7 billion
* Operating income** falls 29% to R1.1 billion
* EPS down 75% to 221 cents
* HEPS down 35% to 501 cents
* Interim dividend withheld as cash preservation is prioritised
given COVID-19 uncertainty
**Before IFRS 2 charges, impairments and abnormal items
Overview
The Group's overall performance reflects the difficult trading
environment and the challenges faced, particularly within Grains,
Groceries, Value Added Meat Products (VAMP) and Exports.
As previously reported, operations at Deli Foods in Nigeria were
terminated in October 2019. As such, Deli Foods has been treated
as a discontinued operation in these results, with the comparative
information restated accordingly.
With regards to the VAMP business, it is noted that the Company has
received offers from two parties for the acquisition of separate
parts of the business as going concerns. Each of the two agreements
is subject to an inter-conditionality clause, such that each
agreement is subject to the other becoming unconditional in all
respects. As a number of the key terms and conditions remain to be
negotiated, it is appropriate to treat VAMP as a continuing
operation in the current period. On conclusion of the respective
Sale and Purchase Agreements, the Company will provide an update
incorporating the financial impact of the disposals as well as the
key conditions precedent to the successful conclusion of the overall
transaction.
Group revenue from continuing operations increased by 2% to
R15,7 billion, with price inflation of 4% offset by an overall
volume decline of 2%. Gross profit margins were impacted by lower
volumes as well as raw material and conversion costs rising ahead
of inflation, with the consolidated gross profit margin declining
from 31,4% to 29,4%. In addition, marketing expenses increased by
9% over the period to R528 million, in line with the strategy to
enhance brand health and drive consumption. The continuing losses
incurred by VAMP, although showing a 14% improvement on the prior
year, further impacted profitability. Group operating income before
IFRS 2 charges, impairments and abnormal items decreased by 29% to
R1,1 billion, whilst the operating profit margin decreased from
10,2% to 7,0%. Excluding VAMP, operating income before IFRS 2
charges, impairments and abnormal items declined by 27% to
R1,4 billion, whilst the operating profit margin decreased to
8,9% from 12.3%.
Earnings per share (EPS) from continuing operations decreased by
75% to 221 cents (2019: 875 cents), whilst EPS from total operations
decreased by 76% to 210 cents (2019: 864 cents). EPS was impacted by
a significantly higher impairment charge in the current period,
whilst earnings in the previous period benefited from the abnormal
after-tax capital profit of R282 million arising from the sale of
Oceana shares to Brimstone.
Headline earnings per share (HEPS) from continuing operations was
down 35% to 501 cents (2019: 773 cents), driven primarily by the
lower level of operating income. Excluding VAMP, HEPS from continuing
operations declined by 30% to 611 cents (2019: 872 cents). HEPS from
total operations decreased by 36% to 489 cents (2019: 762 cents).
Interim dividend
The Board of Directors has decided not to declare an interim dividend.
The Board considers this to be prudent given the short-term uncertainty
related to the COVID-19 Lockdown measures. Depending on the Group's
trading performance for the full financial year and the financial outlook
at that time, a dividend will be re-considered at year-end in line with
the Group's dividend policy of 1.75 times cover (based on HEPS).
Outlook
The pace at which we move through the various Lockdown phases to fully
re-opening the economy remains uncertain, whilst the impact on consumers,
unemployment and disposable incomes is likely to be dire. We anticipate
that demand patterns will change and are preparing for significant changes
in consumption and shopping behaviour as we move out of the acute phase of
the National Disaster period and into, what is likely to be, a deep and
prolonged recession.
As existing procurement positions are depleted, the second half will be
impacted by significant cost push due to Rand weakness, global supply chain
disruptions and additional costs incurred during the Lockdown period. These
costs, together with the effect of Government regulations on pricing during
the National Disaster period, may have an impact in excess of R500 million
on profitability.
Our immediate focus is to ensure the ongoing safety of our employees whose
commitment during this period has been truly inspirational. We are
prioritising the building of adequate stock cover to cater for the possibility
of potential disruptions to the supply chain and ensure the consistent
availability of our products.
In the short to medium term, cognisant of a constrained consumer, we will
prioritise innovation towards value offerings whilst re-engineering our
business to optimise costs and improve efficiencies.
By order of the Board
KDK Mokhele NP Doyle
Chairman Chief Executive Officer
Bryanston
22 May 2020
Date of release: 25 May 2020
This short-form announcement is the responsibility of the Directors of the
Company and has not been reviewed or audited by the Group's auditors. The
information disclosed is only a summary of the full announcement and does
not contain full or complete details.
Any investment decisions should be based on the consideration of the full
results announcement ('results'). Tiger Brands' results are available on
the Company's website www.tigerbrands.com and
https://senspdf.jse.co.za/documents/2020/jse/isse/TIIH/TigerHY20.pdf.
Copies of the results announcement may be requested from the Company's
investor relations department during normal business hours on
investorrelations@tigerbrands.com and are available at no charge.
Registered office: 3010 William Nicol Drive, Bryanston, 2021
Independent non-executive directors: KDK Mokhele (Chairman). MO Ajukwu,
MJ Bowman, CH Fernandez, GA Klintworth, M Makanjee, TE Mashilwane,
MP Nyama, M Sello, DG Wilson
Executive directors: NP Doyle (Chief Executive Officer)
Secretary: JK Monaisa
Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
Date: 25-05-2020 08:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
