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Tiger Brands: Challenges likely to persist

Feb 13 2013 08:42 I-Net Bridge

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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 input costs.

“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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