Tiger Brands making progress to position itself for long-term growth, says CFO Deepa Sita

The group has seen growth in its operating income and across its various revenue streams for the year.

Tiger Brands’s focus on cost savings and improvements in production efficiencies over the year has resulted in positive operating leverage, says CFO Deepa Sita. The group has managed to increase its operating income by 20 percent to R3 billion for the year ended September.

This, Deepa says, shows that the group is making steady progress on its strategic priorities to position itself for long-term growth.

Total revenue from continuing operations grew five percent to R31.2 billion, underpinned by price inflation of seven percent, which was partially offset by an overall volume decrease of two percent. Domestic revenue for the year also increased by five percent to R27.6 billion, driven primarily by the group’s Other Grains business.

Total revenue from the exports and international businesses increased by seven percent to R3.6 billion, which Deepa says was attributable to a strong start to the year as trade in Nigeria resumed following the resolution of the trademark dispute with a former distributor.

“If we take out the once-off incidences of the product recall and the July unrest, there are signs of recovery, with an improved performance from our core business,” she explains. “We managed to achieve this despite the high levels of volatility and uncertainty and the increased pressures on the socio-economic and envionental fronts in recent years.”

Tiger Brands has also declared a total dividend of 826 cents per share for the year.

Deepa adds that 2021 marks a special moment for Tiger Brands as it celebrates its centenary. “It is a milestone that few organisations in South Africa have reached and is demonstrative of our resilience as a company and testament to the strength of our brands and the quality of our people.”

Pressure on consumers will remain
However, Deepa says it's not all good news as Tiger Brands expects that the challenging economic climate and pressure on the consumer will remain. “Against this backdrop, we are focusing our efforts against five key pillars to meet the needs of consumers, optimise our supply chain, drive cost savings and efficiencies and build a growth pipeline, while we continue to ignite our people to deliver on our strategy.”

She explains that, in the last year, Tiger Brands has strengthened its focus on meeting consumers’ needs and delivering value to shoppers. Looking forward, the group has plans to introduce additional innovations in the value space, while also capturing opportunities in the health, nutrition and snacking segments.

“It goes without saying that, while we have shown good progress in terms of our cost-saving and efficiencies, we must continue on this path,” Deepa says. “There are a number of factors that are beyond our control, including the cost-push caused by rising inflation and the impact of global supply chain constraints, and we need to mitigate the impact of these as much as possible.”

Increasing exposure to emerging growth trends
Deepa says that Tiger Brands has a strong balance sheet that presents the opportunity to make carefully considered acquisitions that will help the group’s exposure to the emerging growth trends it has identified.

She explains that the group’s increased focus on responding to consumer needs saw it launch 46 innovation projects over the last year. “These projects tap into areas that are becoming critical drivers for consumer buying habits, including value, health and nutrition, and the growing trend to snack. We are looking to build on the momentum and the progress we are making in this space.”

In addition, long-term growth opportunities will also be accessed through the Tiger Brands Venture Capital Fund, which was established earlier this year.

“We are in the final stages of discussions with a business that is closely aligned to our health and nutrition strategy,” Deepa says, adding that the group is also assessing a further nine opportunities.