Shares in SA’s biggest food producer, Tiger Brands, fell the most in more than four months on Thursday after the group reported lower volumes of goods sold, while flagging a tough time ahead.
The share price closed at R202.91, down 3.59%.
Tiger, the owner of Koo, Oros, Beacon, Tastic and Jungle Oats, said consumers were buying more on promotion and limiting their spending to essentials as inflation in food and nonalcoholic beverages rose far ahead of consumer inflation.
Group revenue for the four months to the end of January fell 1% year on year, driven by volume declines of 8%, which were offset by price inflation of 7%. Black Friday and festive season sales fell short of expectations, it said.
The group said it was working hard to arrest the drop in volumes of products sold to ensure long-term sustainability.
Tiger appointed industry veteran Tjaart Kruger as its CEO in October, as the board felt new leadership was required to respond to challenges facing the company.
Under Kruger, it has embarked on a restructuring and cut a layer of leadership under the MD level. The group said this would help to increase the speed in execution of its plans to improve the business.
It wants most decisions to be made at the level of the individual business units. Tiger has also appointed six managers to report directly to the CEO, in a similar move to Pick n Pay’s restructuring in which the retailer appointed a six-person team directly under the boss.
Tiger is also reviewing how it invests and spends its capital.
The current restructuring efforts would start to gain momentum in the second half of the year, it said.
In an effort to invest in the products that generate the best returns, Tiger is trying to get rid of noncore brands and is looking to reduce brands in its home and personal care divisions. It is also trying to reduce the number of products it sells by cutting flavours or variations of popular brands. It said this would result in more efficient manufacturing and reduce complexity.
It said operating income for the six months ending March 31 was expected to be flat to lower compared with the same period last year.
The company said the second-quarter recovery remained largely dependent on improved trading ahead of the Easter period.
The company’s results for the six months to end-March are expected to be released on May 27.
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