Tiger Brands on Monday revised its earnings guidance for the year to end September slightly higher following a better-than-anticipated operating income performance in the second half, which was supported by no disruptions to the supply chain in August and September as Covid-19 infections slowed significantly.

The South African packaged goods company said it expected earnings per share (Eps) from total operations to decline by between 72 and 75 percent, to be between 1 680 cents a share and 1 750c, down from last year’s 2 333c.

Its headline earnings per share (Heps) from total operations was expected to decline by between 27 and 30 percent, to be between 357c and 397c, down from last year’s 1 322c.

In an earlier trading update released on August 21, the group said it expected its Eps to decline by between 76 and 79 percent, while Heps was expected to decline by between 35 and 40 percent.

The group said that the improvement was a result of better performance in the second half as Covid-19 infections slowed down significantly in the country as well as sustained demand domestically, particularly in most breakfast offerings, pasta, groceries, home care and a marginal recovery in Snacks & Treats.

“In addition, improved performances were achieved from Cameroon and other export markets, while a better than anticipated performance from Carozzi aided income from associates. Profitability also benefited from improved cost and efficiency management in the last quarter,” the group said.

However,Tiger Brands added that despite this, operating income for the second six months was likely to be lower than the same period last year, with further gross margin compression evident.

Tiger Brands also expected its Eps from continuing operations, excluding Deli Foods & value-added meat products (Vamp), to be between 65 and 68 percent lower than the 2 617c reported last year, while its Heps from continuing operations, excluding Deli Foods and Vamp, was expected to be between 22 and 25 percent lower than the 1 556c reported last year.

The various earnings ranges provided in terms of Eps did not include any further impairments to those recorded at the end of March.

“Following further assessments of the carrying value of the company's intangible assets and investments, an additional impairment of R43 million was recognised in respect of an associate. Impairments are excluded for the purposes of calculating headline earnings per share,” the group said.

In last year's results the Eps benefited from the surplus of R2 billion arising from the fair value gain relating to the unbundling of the company’s interest in Oceana Group Holdings, including the capital profit realised on the disposal of the company’s residual shareholding in Oceana.

Tiger Brands expects to release its full-year results on November 20.

Tiger Brands shares closed 1.49 percent higher at R204.50 on the JSE on Monday.

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