SA’s listeria scandal halved the sales of Tiger Brand’s meat products division and pushed it into a loss, contributing to the group’s overall sales and profit declining.
The fast-moving consumer goods group’s revenue fell 9% to R28.5bn and its net profit by 22.5% to R2.4bn, its results for the year to end-September released on Thursday morning showed.
Tiger Brands nevertheless maintained its final dividend at R7.02, keeping its dividend for the 2018 financial year at R10.80, the same as in the previous financial year.
Its value added meat products division — which houses Enterprise, whose polony was found to be the source of listeria-related fatalities in March — suffered a 53% drop in revenue to R1.1bn and contributed an operating loss of R252m from a profit of R104.2m in the previous year.
Thursday’s results statement said Tiger Brands expects its product liability insurance to cover legal claims it is likely to face from listeria victims.
“The company has product liability insurance cover appropriate for a group of its scale. Coverage has been confirmed by the insurers, subject to the terms and limits of the policy. The policy will accordingly respond to the claim within its term in the event that the company is held liable,” the results statement said.
Tiger Brands generated 87% of its revenue from its domestic market, which declined 9% to R24.7bn.
Its exports and international division suffered a 10% decline in revenue to R3.8bn.
In contrast to Pioneer Foods, which said its fruit exports benefited from a poor US crop and weaker rand, Tiger Brands said: “The deciduous fruit business had a disappointing year, with lower fruit yields and declining volumes, resulting in an operating loss for the year.”
The group’s largest division, milling and baking, which contributed 31% of total revenue, suffered a 6.6% decline in sales to R8.9bn, partly because maize prices fell 24%.
Tiger Brands’ “other grains” division grew revenue 2% to R3.9bn due to 9% growth in the volume sold.
“The strong growth in volumes in this segment was driven by an outstanding performance in rice, with Tastic reflecting improved market share,” CEO Lawrence Mac Dougall said in the results statement.
“Pasta and noodles also delivered a solid performance. However, the operating income decline of 32% to R342m reflects the intensity of competition in the main meal carbohydrate segment.”
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