Tiger warns of raw-material inflationary pressures
Given the sustained weakness of the rand, JSE-listed Tiger Brands said last month that it was likely that the inflationary pressures on the group’s raw material cost base would intensify over the balance of the year.
“In a constrained consumer environment, where competition is intense, it is expected that trading conditions will remain challenging,” Tiger Brands warned in a statement.
However, the company believes its portfolio of “market-leading” brands, together with a rigo- rous focus on cost control will help to mitigate these challenges.
Volumes and margins would also continue to be managed “judiciously” to ensure long-term sustainable profit growth.
The group achieved a 7% increase in turnover from continuing operations in the four months ended January 31.
During this period, domestic sales volumes softened marginally, owing to increased pricing pressure and a slowdown in demand. “With consumers under considerable financial pressure, the impact of the depreciating rand and rising soft commodity prices were only partially offset by price increases,” Tiger Brands explained.
Conversely, benefiting from rand weakness, as well as the turnaround of underperforming opera- tions, the exports and international businesses delivered an improved underlying performance.
Meanwhile, Tiger Brands made progress with regard to divestment in its lossmaking Nigerian division Tiger Branded Consumer Goods (TBCG), formerly Dangote Flour Mills.
Further to its December 14, 2015, announcement, regarding the disposal of its 65.7% shareholding in TBCG to Dangote Industries, the company obtained the approval of the South African Reserve Bank and the Securities and Exchange Commission of Nigeria.
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