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Tiger Brands overcomes drought with modest growth and increase in dividends

Cape Town – Consumer brands manufacturer Tiger Brands [JSE:TBS] has weathered the drought and saw its headline earnings per share rise by 7%, while it increased its dividend by 4% for the six months ended 31 March 2017, it announced on Thursday.

Turnover from continuing operations increased by 7% to R16.4bn, and contributions from the domestic operation increased by 8% to R14.3bn, driven by the grains division, Tiger Brands said in a statement.

The group’s operating performance was negatively impacted by the underperformance of its exports and international businesses. While turnover remained at R2.1bn, operating income decreased by 25% to R194m, it said.

The results come amid a strategic review, with a new operating model to drive growth objectives, which will be implemented in the new financial year.

“The immediate priority is to rejuvenate the domestic business to deliver sustainable, profitable growth,” said Tiger Brands CEO Lawrence Mac Dougall in a statement on Thursday.  

“Importantly, Africa and other emerging markets remain a key part of our growth strategy,” he said. “We have refined our approach to our African strategy by exiting non-core categories in Kenya and Ethiopia.  

“Looking ahead, we will prioritise core category opportunities based on market attractiveness, strategic fit and our right to win.  Similarly, the role of associates will be reviewed continuously,” he said.

Tiger Brands said the outlook for 2017 is challenging, with volumes in the domestic market having significantly slowed in the second quarter, while a recovery in the rest of Africa is not imminent.

“Having largely been successful in correcting margins and recovering exceptional cost push, the key challenge will be to manage market share and volume growth without compromising profitability,” it said. “This will be driven by focused execution, targeted marketing investment to sustain the strength of the company's power brands and appropriate cost control measures.”

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