JSE-listed Tiger Brands has delivered a mixed set of results for the six months ended March 31.

During the period, the trading environment remained difficult, with continued pressure on

consumer spending, resulting in sales volume increases in the domestic business but low price inflation, which impacted on margins, the company reported on Wednesday.

Group revenue of R15.4-billion from continuing operations was down 2% year-on-year.

Domestic revenue, excluding value-added meat products (VAMP), was 6% higher year-on-year, but revenue from exports and the international business decreased by 11% year-on-year, mainly as a result of lower export volumes and price deflation in international markets.

Operating income before International Financial Reporting Standards 2 charges from continuing operations decreased by 24% to R1.5-billion. This decrease was driven largely by the VAMP and grains operations, but partially offset by significantly lower losses in deli foods and the deciduous fruit business.

Operating income from continuing operations, excluding VAMP, decreased by 9% year-on-year to R1.8-billion.

Strong volume performances were recorded in beverages, home care, baby care and groceries, offset by a 1.2% decline in grains volumes. All categories, except sorghum-based products, maize, pasta and baby care recorded selling price inflation.

However, price increases were insufficient to fully recover cost increases, resulting in negative operating leverage.

Power outages and social unrest also continued to interrupt operations.

During the period, goodwill of R100-million in respect of Davita was impaired. This arose as a result of the consistent risks associated with key export markets, with lower sales projected for Nigeria and Mozambique, as well as lower sales forecasted for the powdered seasoning brand, Benny.

The company has declared an ordinary dividend of 321c apiece and a special dividend of 306c apiece, with a total interim dividend of 627c apiece. 

Headline earnings per share from continuing operations was down 12% to 762c.

Meanwhile, owing to the unbundling of the company’s interest in Oceana Group, with effect from April 29, the company expects its earnings per share (EPS) for the financial year to September 30, to be more than 20% higher than the EPS of R14.58 reported for the 2018 financial year.

The unbundling of the company’s interest in Oceana gave rise to an unrealised fair value gain of R1.63-billion through the income statement.

OUTLOOK

The company will continue to focus on positioning the business for the future. Embedding the operating model remains a priority as is driving the cultural transformation that

will result in a more agile and flexible organisation.

In tandem with the above, the company will review processes, structures and overhead costs to identify opportunities that will improve operational efficiencies and reduce its cost base, particularly as selling price inflation across the portfolio is expected to remain low against a backdrop of constrained consumer spending.