Tiger Brands reports 23% drop in headline earnings
Tiger Brands has reported a 23 per cent drop in headline earnings per share. The results reflect the challenges faced by the company in maintaining margins. Lockdown measures created favourable tailwinds in some areas, with corresponding headwinds in others. Tiger Brands CEO, Noel Doyle joins CNBC Africa for more.
Fri, 20 Nov 2020 11:51:51 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Tiger Brands reports a 23% drop in headline earnings per share, reflecting the impact of COVID-19 on margins and business operations.
- The company faces challenges due to pricing regulations and varying consumer demands during the pandemic, leading to cost implications and revenue constraints.
- Tiger Brands is resizing its business, focusing on strategic growth initiatives domestically and in Africa, and planning significant capital investments to drive expansion and market penetration.
South African-based food and beverage company, Tiger Brands, has reported a 23% drop in headline earnings per share, reflecting the challenges faced in maintaining margins in the current environment. The company's CEO, Noel Doyle, discussed the impact of the COVID-19 pandemic on the business and the strategies being implemented to navigate through these turbulent times.
The COVID-19 pandemic brought about a mixed bag of results for Tiger Brands, with varying impacts on different segments of the business. The lockdown period initially led to a surge in demand in the grains business, while businesses tied to out-of-home consumption, such as baby foods, snacks, treats, and sports beverages, suffered. Doyle highlighted that the COVID impact cost the company over 400 million rands in the last six months, primarily from direct compliance costs and pricing constraints imposed by regulations.
Despite the challenges, Tiger Brands saw some improvement in the second half of the year compared to the pre-COVID period. Doyle acknowledged the impact of pricing regulations underpinned by the state of national disaster, estimating that they cost the company around 200 million rands. He emphasized the importance of engaging with regulators and understanding the purpose of the regulations amidst a challenging societal landscape.
Looking ahead, Tiger Brands is focused on resizing the business, aligning with future strategies, and exploring growth opportunities domestically and across borders. The company has begun restructuring and realigning its brands and operations to meet the changing market demands and ensure sustainable growth. With a new Chief Growth Officer appointed for the rest of Africa, Tiger Brands aims to expand gradually and strategically into the African market, learning from past experiences and avoiding potential pitfalls.
Discussing the potential for growth in Africa, Doyle highlighted the significance of the Africa Continental Free Trade Agreement (AfCFTA) in enhancing trade opportunities. While optimistic about the prospects, he emphasized the need for effective implementation and streamlined regulations to facilitate inter-African trade. Doyle underscored the importance of product compliance, logistics, and regulatory harmonization across different geographies to ensure seamless exports and market access.
In terms of future investments, Tiger Brands plans to inject 1.5 billion rands in capital investment over the next 12 months, with a three-year investment target of 4.5 billion rands to drive growth and expansion. The focus will be on key brands such as Devita, beverages, snacks, treats, groceries, and milling businesses, with additional investments earmarked for the bakery and home care segments.
Despite the current challenges and the uncertainties surrounding the evolving economic landscape, Tiger Brands remains committed to its growth trajectory and strategic initiatives to position the company for long-term success. By leveraging market insights, operational efficiencies, and a customer-centric approach, Tiger Brands aims to navigate through the turbulent times and emerge stronger on the other side.