JSE-listed fast-moving consumer goods manufacturer Tiger Brands on Thursday reported a 10% increase in its operating income from continuing operations to R2.2-billion for the six months ended March 31, driven by higher pricing.
Operating income in the domestic business grew by 15% to R2-billion, driven primarily by the grains division, which achieved a 16% increase in income to R1-billion.
Milling and baking also delivered strong growth, with operating income up 12% to R92-million, supported by a 3% increase in volumes. The division also gained from the wheat-to-bread value chain benefiting from market share gains, improved execution and enhanced quality.
Profitability in maize, however, was negatively affected by higher raw material costs, which were not fully recovered in selling prices.
Other grains reflected strong growth, increasing turnover by 11% to R2-billion and operating income by 33% to R228-million. The stronger rand contributed positively to improved margins.
Meanwhile, the company reported 12% growth in its food division’s income, driven by a 32% increase in its groceries income to R310-million and snacks and treats income increasing by 10% to R162-million, although impacted by lower volumes.
The beverages business delivered lower volumes in the period under review, owing to industrial action in the first quarter, as well as drought-related water restrictions and electricity disruptions in the second quarter, which negatively impacted on service levels.
This led to income declining by 11% to R93-million.
Tiger Brands’ home, personal care and baby division saw overall income grow by 25% to R341-million.
However, the company noted that its strong domestic performance was partially diluted by tough trading conditions in exports and international coupled with a decline in income from associates, with overall volumes declining by 3%.
Operating income in its exports and international division decreased by 25% to R194-million.
The company added that the outlook for the balance of the year was particularly challenging, with volumes in the domestic market having significantly slowed in the second quarter, while a recovery in the balance of the continent was not imminent.