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TIGER BRANDS LIMITED - Voluntary trading update for the four months to 31 January 2022

Release Date: 16/02/2022 13:00
Code(s): TBS     PDF:  
Wrap Text
?Tiger Brands? or ?the Company?
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
Share code: TBS
ISIN: ZAE000071080

Group revenue from continuing operations for the quarter ended 31 December 2021 was down 1%, driven primarily by three categories. Bakeries experienced significant volume losses as a result of intense price competition, compounded by rising cost pressures and illegal work stoppages in October and November. Snacks & Treats was impacted by supply challenges due to an 8-week labour disruption in November and December, compounded by low opening stocks of finished product because of the civil unrest experienced in July 2021. Rice prices deflated significantly driven by the decline in international prices. Excluding these three categories, the balance of the portfolio delivered revenue growth of 3%, comprising 1% volume growth and price inflation of 2%.
A marginal recovery in Snacks & Treats, as well as a slower rate of decline in Bakeries in January, resulted in group revenue from continuing operations for the four months to 31 January 2022 showing an increase of 1%.
The impact of the industrial action referred to above, at an operating income level, amounted to R120 million for the three months to December 2021. Although the Snacks & Treats business has made significant progress in restoring supply, it is anticipated that full supply will only be achieved in July 2022.
Pleasing performances were achieved in Rice, Groceries, Beverages, Baby and Chococam, whilst weak category demand due to unfavourable weather conditions impacted insecticide volumes within Home Care. In addition, disappointing first quarter sales into Nigeria adversely affected Exports.
The company has not been immune to the global supply chain squeeze. We have experienced challenges in managing raw material, ingredients and packaging availability, timeous supply, as well as significant cost increases. The inability to pass through unanticipated cost push resulted in margin compression in the first quarter. This is likely to be ameliorated in the second quarter as selling price increases are being implemented. The impact of these price increases on volumes is being carefully managed.
The poor start to the financial year makes it imperative that the ongoing focus on cost saving initiatives and supply chain efficiencies be accelerated. In addition, distribution gains on product innovations are gaining traction. With regards to bread, the immediate priority is to recover the significant market share losses, facilitated by optimal pricing and effective promotional activity. However, profitability in this category is likely to remain under pressure for the remainder of the year. Improvements in revenue management are being accelerated across the portfolio. VENTURE CAPITAL FUND
As previously reported, the Tiger Brands Venture Capital Fund has significantly progressed the execution of its first investment in a business closely aligned to our health and nutrition strategy.
Further to the previous updates regarding the Deciduous Fruit business, shareholders are advised that discussions with relevant parties continue. At this stage, we are not able to provide further details regarding these discussions. An update will be provided when it is appropriate to do so. UPDATE ON CIVIL UNREST AND PRODUCT RECALL
During December 2021, the group received an interim payment of R87 million from SASRIA. The payment relates primarily to the stock losses and asset damages at our Snacks & Treats and Rice facilities following the civil unrest in July last year. The interim payment represents approximately 50% of the total amount being claimed for material damages under the SASRIA policy.
The insurance claim related to the recall of canned vegetable products in the latter part of the previous financial year is in the process of being assessed. We have, in the meantime, received confirmation of an interim payment of R17 million, relating to the operational and logistics costs of implementing the recall, which represents approximately 30% of the total amount claimed.
As previously reported, the supply contract with the third-party supplier of the defective cans makes provision for the Company to recover, from the supplier, a portion of the costs incurred, and losses sustained. The contractual claim process against the supplier is currently underway. UPDATE ON CLASS ACTION
On Friday, 4 February 2022, the Supreme Court of Appeal (SCA) overturned the earlier order of the Gauteng Division of the High Court, Johannesburg which required various third parties (including the National Institute of Communicable Diseases) to hand over epidemiological information in their possession relating to the Listeriosis outbreak, in accordance with the subpoenas issued by Tiger Brands.
Following the above decision by the SCA, it now remains for the parties to work towards completion of the pre-trial preparations to get the matter ready for trial, where liability will ultimately be determined by the Court. Tiger Brands reiterates its commitment to ensure that a resolution of the matter is reached in the shortest possible time, in the interest of all parties, particularly the victims of Listeriosis.
The information above has not been reviewed or reported on by the Company's auditors.
Tiger Brands? results for the six months ending 31 March 2022 are expected to be released on SENS on or about 25 May 2022. Bryanston 16 February 2022 Sponsor
J.P. Morgan Equities South Africa Proprietary Limited Queries:
Nikki Catrakilis-Wagner Erene Kairuz Tel: +27 11 840 4841 Tel: +27 11 840 4841
Date: 16-02-2022 01:00:00
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