Tiger Brands [JSE:TBS] has been hammered by tough trading conditions, including the impact of a deadly listeriosis outbreak early this year which shut down a number of its factories and led to a massive recall of cold meat products.
The leading manufacturer and distributor of food products saw group operating income decline by 28% to R3.3bn, capping what has been a challenging year for the business, which has a large footprint on the continent. The company’s full year results showed a drop in key financial indicators, with domestic revenue shrinking by 9%, volumes down 5%, with price deflation of 4%.
Early this year, Tiger Bands recalled processed meat products and suspended operations at several of processing plants over listeria outbreak, which hit the performance of Value Added Meat Products (VAMP).
"As a consequence, revenue declined 52% to R1.1bn, while an operating loss of R252m was incurred," it said in its audited group results for the year ended 30 September 2018.
The group announced a gross final cash dividend of 702 cents per share. This, together with its earlier interim dividend of 378 cents per share, brought its total dividend for the year to 1 080 cents, unchanged from the previous year.
The outbreak, which killed over 200 people and infected over 1 000, was described by the World Health Organization as the largest ever recorded.
The massive, country-wide recall of foods such as polony, Russians and viennas led to panic among consumers, with the company defending its infection control measures.
"The abnormal losses of R422m include the significant impact of the value added meat products recall in the current year of R380m."
Tiger Brands shut down factories in Polokwane, Germiston and Pretoria as a results the listeria outbreak, with operations remaining suspended for the entire second half of the financial year.
Operating income declined by 8% to R1.1bn excluding cold meat products.
Headline earnings per share from continuing operations declined by 26% to 1 587 cents, while earnings per share from continuing operations decreased by 21% to 1 451 cents.
"Tiger Brands' results reflect the depressed consumer environment, which deteriorated further in the second half of the year," said the company.
The impact of VAT increase from 14% to 15% in April also piled pressure on operations, weakening consumer spending amid increases fuel prices. The Johannesburg-based company said it used the period of factory closures to undertake upgrades and train employees.
The Germiston facility re-opened on October 12. The Enterprise meat canning operation, which is a separate unit on the Polokwane site, resumed production on September 12.
Structural refurbishments have been completed at Polokwane, and the facility is being assessed by local authorities, with full production to commence once it gets the required regulatory approvals.
The group's shares were trading at R269.55 a share at 10:05 on the JSE, down 0.5% on the day.
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