Skip to main content

Tiger Brands sales slow as prices rise

| Supplier news

Tiger Brands’ volumes in SA had "moderated" after it raised prices to recover input cost increases, the consumer goods company said on Monday, while reporting a slowdown in sales growth for its first quarter through to December.

Turnover, at R8.2bn, was 7% higher than the same three months of the previous year, when sales grew 10%. Tiger’s shares fell 5.24% to close at R371.94 on Monday, but have still climbed 41.8% over the past year.

Tiger said despite input cost pressures being worsened by the weakening rand, "the market shares of the company’s core brands have remained resilient, although competitor activity generally remains intense throughout the business".

Bakery volumes were dented by a five-week strike in KwaZulu-Natal during October and November. Tiger said that operating margins and profitability in the grocery business "continue to improve", while pricing pressure in the home and personal care unit was weighing on margins.

Meanwhile, Tiger said its troubled Nigerian business, Dangote Flour Mills, "has achieved positive volume momentum and operating leverage due to tight cost control and improved efficiencies".

"Its results, however, have been negatively affected by foreign exchange losses on its foreign currency borrowings, following the recent devaluation of the Nigerian naira," the company said.

Bloomberg reported on Monday that the naira fell to a record against the dollar after the West African nation postponed elections, and in so doing increased risks in an economy already under pressure from the fall in oil prices. The naira depreciated for a sixth day on Monday to the weakest level since Bloomberg started compiling the data in January 1999.

Dangote last week reported a 4.1% higher loss of 2.92-billion naira for the first quarter through to December, as the declining naira offset a 27.5% surge in sales.

Tiger’s 65.7%-held subsidiary included a currency devaluation charge of 1.29-billion naira and warned that a further devaluation of the currency "will impact negatively on the outlook for the current financial year".

Tiger said on Monday it expected that market pricing "will adjust in time once stability is restored to the local currency market".

"The short-term prospects for the Nigerian businesses remain extremely challenging, notwithstanding the positive operational momentum that the DFM (Dangote) business is starting to achieve. Tiger Brands continues to remain focused on the long-term prospects of this business," the group said.

Pin It

Related Articles

By: Daily Investor  Ramokgopa referred to South African municipalities owing Eskom R78 billion, which is increasing at an alarming rate.
By: Se-Anne Rail - IOL Knorr is recalling its brown onion gravy sachets after manufacturers have discovered some packets may contain traces of cow’s milk and soy.
By: Bianke Neethling – Daily Investor Eskom has done a tremendous job of limiting unplanned outages and improving the performance of its coal fleet, which bodes well for load-shedding in South Africa going forward.
By: Shaun Jacobs – Daily Investor In June, the Constitutional Court ruled in favour of Coronation in its legal battle against SARS regarding the profits earned by its Irish-based subsidiary, Coronation Global Fund Managers (CGFM). 
By: Myles Illidge – My Broadband Eskom is cracking down on corruption surrounding its operations and service providers, and using new technologies and systems to minimise opportunities for criminal activity.