Tiger Brands posts 21% increase in earnings
Tiger Brands reported a 21 per cent rise in headline earnings per share as revenue gained 8 per cent. The company noted strong revenue growth in the first quarter of the financial year and said it also clamped down on costs. Tiger Brands CEO, Noel Doyle joins CNBC Africa for more.
Thu, 20 May 2021 10:52:30 GMT
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AI Generated Summary
- The focus on cost savings and efficiency improvements has contributed to Tiger Brands' strong performance, despite facing challenges from higher input costs.
- Tiger Brands anticipates continued pressure on consumer demand and pricing in the market, emphasizing the importance of driving meaningful innovations and investing in the company's VC fund for future growth.
- The company is exploring expansion opportunities in the rest of Africa, with plans to strengthen its presence in various sectors and leverage the Africa Continental Free Trade Area to enhance local manufacturing and reduce dependencies on imports.
Tiger Brands, a leading South African consumer goods company, recently reported a 21 per cent rise in headline earnings per share, demonstrating a strong performance in the first quarter of the financial year. The company's CEO, Noel Doyle, highlighted the improved manufacturing capacity and cost-saving strategies that have contributed to this success. While not currently operating at full production capacity, Tiger Brands has made significant progress compared to the previous year. Doyle mentioned that the company has the potential to introduce more products to the market if consumer conditions improve.
One of the key drivers of Tiger Brands' performance has been the focus on cost savings, particularly in procurement and factory efficiencies. Doyle noted that productivity in the factories has increased by 6 per cent, leading to lower levels of wastage. Despite facing challenges from higher input costs, including surging soft commodity prices, Tiger Brands managed to maintain flat gross margins by using its cost savings effectively. This allowed the company to offset the impact of rising raw material and ingredient costs.
Looking ahead, Tiger Brands anticipates continued pressure on consumer demand and pricing in the market. With expectations of volume declines across all markets, the company is exploring strategies to grow revenue and volumes without resorting to aggressive price hikes. Doyle emphasized the importance of driving meaningful innovations and investing in the company's VC fund to support future growth.
In addition to focusing on the South African market, Tiger Brands is eyeing expansion opportunities in the rest of Africa. The company plans to strengthen its presence in various sectors, including seasoning, soft drinks, grocery, personal care, and pest care products. By leveraging its distribution network and investing in local talent, Tiger Brands aims to establish a solid foundation for growth in the region.
Discussing the Africa Continental Free Trade Area, Doyle acknowledged the long-term prospects the agreement offers for the company. While recognizing the potential threats and opportunities presented by the trade deal, Tiger Brands sees the AFCTA as a chance to manufacture products closer to key markets and reduce dependencies on imports from distant regions.
Furthermore, Tiger Brands is set to operationalize a VC fund with a focus on supporting startups in the food and beverage sector, as well as related technologies. Doyle reiterated the company's commitment to providing expertise and capital to nurture these businesses, ultimately aiming to scale them up while fostering collaboration and innovation.
Overall, Tiger Brands remains optimistic about its growth prospects despite the challenging consumer environment. With a strategic focus on efficiency, innovation, and market expansion, the company is navigating through tough market conditions while aiming to emerge stronger in the long run.