Tiger Brands: Turnover up 23 percent in FY 2008

Johannesburg / ZA. (tbl) Tiger Brands Limited South Africa´s largest food and branded consumer-goods company, said full-year profit rose 1,4 percent; partly boosted by pension fund surpluses. Net income rose to 2,274 billion South African Rand (ZAR) or 14,33 ZAR per share in the year ended September 30, from 2,243 billion ZAR or 14,02 ZAR in the prior period, the Johannesburg-based company said in a stock exchange statement. Profit-per-share before one-time items will rise this year, the company said. Some highlights:

• Headline earnings per share plus 36 percent
• Turnover from continuing operations plus 23 percent
• Operating income before abnormal items from continuing operations plus 17 percent
• Total dividend 7,86 ZAR per share – plus 19 percent

«Domestic Food» section development

Tiger Brands´ segment «Domestic Food» increased turnover and operating income by 23 percent and nine percent respectively.

Within the Grains segment, the lower growth in operating income relative to turnover was primarily as a result of significant raw material cost increases which were partially absorbed by the Milling and Baking business. Notwithstanding the difficult trading environment, the «Albany» brand continued to gain market share. The «Tastic» and «Aunt Caroline» rice brands sustained their positive first half performance despite the global pressures on raw material costs and freight rates. The Oats category enjoyed the full benefits of the major upgrade of its manufacturing facility in Maitland, which was completed in 2007.

The Groceries business recorded a 19 percent improvement in operating income off a 16 percent increase in turnover. Strong volume growth was achieved on the core «KOO», «All Gold» and «Black Cat» brands in the face of rising input cost pressures. Pasta profitability and the supply of «Fatti´s + Moni´s» product normalised in the second half of the year following the commissioning of the new state of the art pasta manufacturing facility in Isando.

Snacks + Treats posted a pleasing growth of 20 percent in operating income off an increase in turnover of 14 percent. Despite the pressure on consumer discretionary spending, volumes on key brands such as «Beacon», «mmmMallows» and «Smoothies» continued to show growth.

The performance of the Beverages business was extremely disappointing with operating income 87 percent below last year. Consumer demand remained sluggish during the second half following the negative impact on the business of the cold and wet summer in the first six month period.

Raw materials costs continued to escalate rapidly in the Value Added Meat Products category. A highly competitive and challenging environment resulted in the business being unable to raise selling prices sufficiently, resulting in a compression in operating margins.

The Out of Home business recorded a 66 percent improvement in operating income off a 21 percent increase in turnover despite a disappointing performance by the Prepared Meals division.

Export

Exports achieved a significant improvement on the prior year, with operating income increasing by 115,6 million ZAR to 219,8 million ZAR. Langeberg + Ashton Foods (67 percent held), the Deciduous Fruit business, was the primary contributor to the improvement in profitability as a result of higher international prices, a weaker Rand and improved volumes. The Tiger Brands Africa division has enhanced its distribution capabilities and has benefited from heightened in-country sales focus, particularly in Zambia and Angola.

Acquisitions

As part of its stated strategy of seeking growth opportunities in Africa, the Company has concluded two acquisitions during the past six months. The Company acquired a 51,0 percent stake in Haco Industries (Kenya) Limited, a leading branded personal care and consumer products company in Kenya, with effect from 1 June 2008, and a 74,7 percent interest in Chocolaterie Confiserie Camerounaise (Chococam), a branded confectionery business in the Cameroon, effective 01 August 2008. These two acquisitions provide strategic in-country presence in the East and Central African regions from which Tiger Brands will continue to expand its horizons in efforts to grow a branded business on the rest of the African continent. The two companies performed in line with expectations for the period to 30 September 2008.

Info: The complete annual results of Tiger Brand´s fiscal year 2008 are available here. Prospects have the choice between English and Afrikaans.