Johannesburg – Food group Tiger Brands [JSE:TBS said on
Tuesday that the domestic trading environment continues to be challenging‚
characterised by constrained consumer spending‚ intense competition and rising
input cost inflation.
These factors‚ which are exacerbated in certain businesses
by volatile soft commodity prices and rand weakness‚ it warned‚ have affected
the group’s performance and are likely to persist for some time.
In a trading update provided at the group’s annual general
meeting‚ Tiger Brands said: “The ongoing challenges in the rice market that
were reported at the end of the last financial year remain. Rice turnover for
the first quarter was lower than the turnover for the corresponding prior year
period‚ notwithstanding a small improvement in volumes and higher raw material
“The group’s focus on driving efficiencies and optimising
cost structures remains a key strategic thrust in ensuring that the group is
able to achieve sustained volume growth in the future.”
It added that the Dangote Flour Mills acquisition had been
concluded with effect from 4 October 2012 and represented a significant growth
opportunity for the group in the medium term. However‚ in the short term‚ as
previously indicated‚ the acquisition would be earnings dilutive.
“Operationally‚ a significant amount of work will be required
to restore the business to an appropriate level of profitability. Some progress
has been achieved; however‚ the full benefits will only materialise over the
next two years‚” Tiger Brands added.
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