Tiger Brands share price continues upward trend

Cape Town - The share price of Tiger Brands continued its upward trend on Thursday after reporting its results for the financial year to the end of September 2016 the day before.

Profit before tax from continuing operations increased by 10% to R4.5bn, after accounting for R335m in impairment charges. These impairments related primarily to goodwill and other intangible assets in the personal care business.

A higher effective tax rate - before abnormal items, impairments and associate income - in the current year of 30.9% resulted in attributable earnings from continuing operations increasing by 4% to R3.3bn.

By early afternoon trade on Thursday the share price was up 1.5% on R398.13. Over the last ten days the share price has increased by almost 10% to close at R392.24 on Wednesday.

According to a company statement, there was a challenging operating environment, but its resilient brands drove strong volume growth. This was particularly the case in the domestic market with total group turnover from continuing operations increasing by 11% to R31.7bn.

"The year under review was characterised by high inflation in raw material input costs, primarily due to the prolonged drought and significant currency volatility. The impact was felt across the Domestic portfolio, most notably in the grains and groceries divisions," the company said.

"Despite a marginal decline in the grains division’s operating income, driven primarily by drought-related cost push in maize and sorghum, the performance of the balance of the domestic portfolio reflects the strength of our brands, with particularly strong performances from groceries, beverages and home care."

Exports

International (including exports) reported a 19% increase in operating income.

"This performance was partially offset by lower profitability in exports due to the challenging economic environment and foreign exchange liquidity issues in key markets including Zimbabwe, Nigeria and Mozambique," said the company.

Income from associates increased by 43% to R861m. It was driven primarily by Oceana Group and Chilean-based Empresas Carozzí. The contribution from associates includes capital profits of R117m arising from certain asset disposals.

The group’s interest in Tiger Branded Consumer Goods (TBCG), formerly Dangote Flour Mills, was disposed of with effect from 25 February 2016.

Earnings per share from continuing operations increased 4% to 2 007 cents, while headline earnings per share from continuing operations was up 2% to 2 130 cents.

Total earnings per share, including discontinued operations (TBCG), increased 90% to 2 034 cents. Similarly, total headline earnings per share (including discontinued operations), increased 19% to 2 127 cents.

The group declared a dividend of R7.02 per share.

Chairperson Andre Parker has advised the board that he will not seek reappointment to the board of the company at the annual general meeting of shareholders in February 2017. Khotso Mokhele will succeed Parker as chair of Tiger Brands following the conclusion of the AGM.