Johannesburg - Tiger Brands, a R30bn consumer foods business, said that its primary interest in the new financial year was to bolster its balance sheet so that it could pursue growth, possibly in the baby foods sector.

This comes after a period of intense restructuring at Tiger Brands in which it disposed of pharmaceutical firm Adcock Ingram as well as its interest in Sea Harvest. Tiger Brands owns iconic brands such as All Gold Tomato Sauce and Fatti's and Moni's.

It also owns Albany bread, the Jungle brand, Ace and Tastic which is housed in its grains business unit.

"Our primary thrust is to have a strong balance sheet to go after growth areas," said Tiger Brands CEO Peter Matlare.

He was responding to questions at the group's full-year financial results presentation, in which it posted a one-fifth increase in headline share earnings ended September.

Headline share earnings came in at R13.38, partly driven by its domestic food division which reported a 76% increase in turnover.

Tiger declared a full-year dividend of 704 cents per share, 10% lower than the 786c/share it issued in the same period last year.

During the period under review, the group bought Crosse & Blackwell mayonnaise from Nestle, 51% of the Kenyan Haco Industries and a chocolate milk and spread company Chococam in Cameroon.

In addition to new growth, Matlare also said the company would look to acquire new mills and replace existing technology.

Rice no longer nice

Tiger Brands said trading conditions for up to three-quarters of its current financial year would be tight. However, its performance in the year to September was described by Thabi Segoale, a managing executive, as "the best performance we've seen".

It was based on better-than-expected operating margins - up to 15.5% from 13.5% - as consumers opted for bread over rice, the company said.

"The margin achieved was ahead of our own expectation," said Segoale, "and it's due to a stronger than expected performance in maize (consumption). We've had a particularly strong year."

According to Segoale, the consumption of maize-based products like bread got off to a slow start in the beginning of the financial year.

However, as the price of rice went up and the recession took its toll on South Africa, consumers downtraded to bread. Segoale also said global commodity prices saw deflationary movement, increasing margins.

According to Tiger Brands, an increase in maize consumption contributed to the grains segment achieving a 16.1% operating margin.

- Fin24.com