Chances that consumer goods group Tiger Brands — a portfolio including Tastic, Koo, All Gold and Enterprise — would come out of the 2018 financial year unscathed were slim to nonexistent.
That the company was at the centre of the fatal listeriosis outbreak was always going to hit its 2018 financial results. But the outbreak, which killed more than 200 people, only aggravated what was a difficult trading environment for SA’s biggest food producer and its peers.
Even without the deadly outbreak, which cost the company R1.4bn in the year to end-September, Tiger Brands was always up against it, as consumer demand had taken strain from the VAT increase and rising transport costs.
Tiger Brands is, however, not alone. Most companies in the food producers’ index are not having the best of times. The index consistently underperformed in 2018, compared with the JSE's all share index (Alsi).
At midday on Monday, the food producers’ index was down 28.28% for 2018, compared with the Alsi’s decline of 13.2%. In the same period, Tiger Brands was down 38.43%.
On the macroeconomic front, Tiger Brands and its peers are bracing themselves for prolonged suffering as 2019 does not promise much in terms of economic growth.
While putting the listeriosis saga behind it is great for Tiger Brands and its shareholders, it does not herald the end of company’s problems, not when the economy is projected to grow at a mere 0.6% in 2018.
On the day that Tiger Brands released its results last week, the Reserve Bank’s monetary policy committee hiked the repo rate by 25 basis points. So consumers will have to buckle their belts one notch tighter.
The Association of Mineworkers and Construction Union (Amcu) is playing a high-stakes poker game with steely Sibanye-Stillwater CEO Neal Froneman and the ultimate losers are the 32,200 employees at the company’s gold mines.
Amcu has called a year-end strike at Sibanye’s three large gold mines and supporting structures by its 15,000 members while the mines are coming out of a very difficult first six months of 2018 during which 21 employees were killed in various incidents.
The operational recovery started slowly in the third quarter, but the wage strike called by Amcu to force through its demands, which it first tabled in July when talks started, is derailing any progress the company saw at its embattled gold mines.
The timing of the strike is peculiar, coming as it does at the end of the year when underground workers push hard to secure bonuses.
Why Amcu would jeopardise their members’ bonuses and by extension impact negatively on their families over the holiday season is unclear.
By some accounts, the timing of the strike is increasingly unpopular, and Amcu president Joseph Mathunjwa has painted himself into a corner with his unequivocal demands for a flat R1,000 a month increase after three other unions settled for slightly lower hikes.
Froneman will not back down, having already stated above-inflation wage increases are one of the key reasons for the dismal state of SA's gold mining industry.
The stage is set for a humiliating climbdown by one party or the other, and Froneman is not the type to blink. But then neither is Mathunjwa. However, his hand may be forced if support for the strike from his members evaporates as financial realities settle in ahead of Christmas.
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