Tiger Brands, which is struggling to lift sales volumes in the tough consumer environment, has a new leadership team in place and is working on a turnaround plan, CEO Tjaart Kruger said yesterday.
The group results for the six months to March 31 show revenue for the fast-moving consumer goods manufacturer had regressed by 1%, driven by price inflation of 8% and a 9% decline in volumes.
An interim dividend increased 9% to 350 cents a share. Headline earnings a share increased 11% to 808c. Group operating profit fell 3% to R1.3 billion. Income from associates increased 44% to R396 million.
Kruger said in an interview the turnaround strategy was necessary because there had been successive years where the group had not produced a reasonable rate of return, and the financial performance was well below that of seven to eight years ago.
In the six-month period good volume growth in its branded foods beverage exports was offset by declines in the domestic business – export revenue makes up about 20% of overall revenue. In the local market, much-improved performances from the Groceries, Beverages, Personal Care, Tiger Brands Food Services Solutions and Baby segments was diluted by underperformance in the grains portfolio and volume declines in bakeries.
Total revenue for Exports and International increased by 22% to R2.6bn, with volumes sold up by 10%. Volumes increased in Mozambique, Zambia and Zimbabwe.
He said the operating landscape remained challenging with South African consumers under heightened strain at least for the foreseeable future.
Kruger said they had restructured the business to bring focus and enhanced agility in decision-making, while initiating programmes to ensure brands were relevant and affordable to consumers.
Since Kruger’s appointment on November 1, 2023, the group had finalised the appointment of a new leadership team. Thushen Govender assumed the role of CFO on January 1, followed by the appointment of managing directors from within the organisation for each of the six business units on February 1.
“The new leadership team has hit the ground running, driving forward key strategic priorities aimed at revitalising the group, stimulating growth, and enhancing profitability sustainably. It is anticipated the effect of key initiatives will start to reflect in the short term,” the group said.
Driving brand relevance and affordability for consumers remained a key priority. Further progress has been made in identifying savings of R500m through the value chain. Product offerings were being streamlined across all segments to discontinue underperforming stock-keeping units (SKUs), identify further optimisation opportunities and enable strategic investment to support its core brand portfolio.
Restructuring had extended to deploying category-specific services back to the business units from the centre, thereby enhancing agility in decision-making. “By eliminating a senior layer of management at the centre and consolidating business units, we have eliminated duplicate roles, resulting in headcount reduction and will drive significant cost savings going forward. Retrenchment costs to date totalled R30m,” the group said.
Underperforming SKUs would be discontinued. The goal was to reduce SKUs by at least 20% over three years.
During the period, Tiger Brands commissioned a new peanut butter manufacturing facility for its Black Cat brand on Johannesburg’s West Rand, following a R300m capital injection. A new, lower-priced variant would soon be available on the shelves as part of a product enhancement strategy, he said.
In the recent Ask Afrika Icon Brands 2024 survey, 11 brands in the Tiger Brands portfolio received top places across 19 categories, with consumers voting them some of South Africa’s most loved and trusted. Seven of these brands were named Icon Brands. The Benny and Crosse & Blackwell brands were also recently named the most recognised and most purchased by consumers in Mozambique, with the Benny brand earning the title of Most Popular Packaged Goods brand (FMCG) in the sub-Saharan African country.
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