South African consumer goods group Tiger Brands today (30 May) reported higher half-year profits as a recovery in volumes in some food businesses helped sales.
In the six months to the end of March, net profit grew 2.6% from a year earlier to ZAR1.32bn (US$135m), the Johannesburg-based company said today (30 May). Headline earnings per share, a key measure of performance in South Africa, was up 4% at 818 cents. The improved earnings were helped by a lower tax rate.
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Operating income was broadly flat, edging up 0.5% to ZAR1.68bn. Last year, Tiger bought a majority stake in Nigerian flour and pasta maker Dangote Flour Mills.
Tiger today insisted the deal was a “significant growth opportunity” for the business but admitted the Nigerian business had affected its profits in the first half of this year. It also pointed to a “significant” decline in the profitability of its rice business due to a deliberate focus on recovering volumes. Excluding these two factors, operating income was up 9%.
Sales were up 21% to ZAR14bn, largely as a result of Dangote, first-time contribution to turnover of ZAR1.6bn. Excluding Dangote, sales increased 7% to R12.4bn.
Turnover for the groceries business was flat year-on-year. Snacks and treat sales were up 11%.
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By GlobalData“The ongoing economic pressures, resultant constraints on consumer spending and increased competitive intensity in the domestic market provide an appropriate context for these results,” the company said. “The group was able to recover volumes in certain key categories, notably within the bakeries, rice and snacks & treats businesses, and maintained profit margins across many of the domestic businesses whilst exercising pricing restraint.”
Click here to view the full earnings release.
