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Tiger Brands [JSE:TBS], which had to shut down a number of its factories and issue a massive recall of cold meat products due to a deadly listeriosis outbreak early in 2018, said in a note to shareholders on Wednesday that it has not as yet received a summons in terms of an intended class action suit against it.
In December 2018, the High Court of South Africa, Johannesburg Local Division granted an order certifying the four classes of claimants in a class action lawsuit against Tiger Brands.
Tiger Brands said on Wednesday that it has product liability insurance cover appropriate for a
business of its scale. Coverage has been confirmed by the insurers,
subject to the terms and limits of the policy.
The policy will accordingly respond to the claim within its terms in the event that the group is held liable.
Trading update
The latest information is part of a voluntary trading update for the four months to 31 January 2019 that Tiger Brands released on Wednesday.
According to the update, group revenue from continuing operations was up 1% compared with the corresponding period last year.
The four months to January 2019 had 85 trading days versus 82 days last year. Excluding value added meat products (VAMP), group revenue from continuing operations was 8% higher, driven by overall price inflation of 2% and volume growth of 6%.
The group is pleased with volume performances recorded in wheat, maize, groceries, snacks and treats, beverages, baby and in particular, home and personal care.
With the exception of sorghum-based products, pasta, maize and rice, all categories recorded selling price inflation although price increases were not sufficient to fully recover cost increases, resulting in gross margin compression.
According to Tiger Brands, the re-launch of the VAMP business has been well received by customers and consumers, however challenges in managing the factory start-ups have resulted in the inability to fully meet demand in this period, which has had a significant negative impact on VAMP's operating performance.
The group said, however, that good progress is being made to resolve these challenges.
It expects the trading environment to remain challenging for the remainder of the financial year, with ongoing pressure on consumer spending.
Unbundling
The group announced previously that the board has decided to pursue an unbundling of its shareholding in Oceana Group. There is a proposed sale of 8 000 000 Oceana shares to Brimstone Investment Corporation.
Subject to the fulfilment of all the conditions, this sale will take place prior to the unbundling date.
The process of unbundling the remaining 49 104 774 shares is on track and expected to be completed by the end of April 2019, according to Tiger Brands.
By mid-morning on Wednesday Tiger Brands shares were trading up 2.48% at R272.34 per share.
