South Africa’s Tiger Brands has reorganized its organizational structure into six business units, with the goal of “improving profitability.”
The food conglomerate has established divisions for bakeries, grains, culinary, treats and beverages, home and personal care, snacks, and baby food. Each division will report directly to the CEO through designated executives.
Tiger Brands further mentioned that it is implementing restructuring below the newly appointed managing directors for the various units. In a trading update, the company stated its expectation to finalize the second phase of the restructuring by the end of its second quarter.
The group also stated, “The renewed focus on rationalising SKUs will reduce complexity, resulting in manufacturing and procurement efficiencies in due course. Additionally, achievements in portfolio and SKU rationalisation are expected to reduce the number of brands requiring support, allowing for more focused investment yielding a higher return on investment.”
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In the filing, the company said, “Tiger Brands’ domestic performance reflects the difficult trading environment, with inflation in food and non-alcoholic beverages rising ahead of CPI. Prices of essential items such as sugar, vegetables, meat, eggs, and rice surged by almost 20% (Stats SA). As a result of the higher inflation over the period, consumer shopping habits shifted towards buying more on promotion and limiting their spend to essentials.”
Group revenue for the four months ended 31 January 2024 declined by 1% year-on-year, driven by volume declines of 8% offset by price inflation of 7%. The grains unit experienced volume regression across all segments, “due to a difficult trading environment,” the group noted.
Within the consumer brands division, year-on-year volume growth was achieved in the snacks, treats, and baby segments, as well as “strong volume growth” in beverages.
Groceries saw a decline in volume due to “absolute volume declines across categories.”
In Tiger Brands’ full-year results up to 30 September, it disclosed a 10% rise in revenue to R37.4 billion ($2 billion), but highlighted “low to no growth” for the upcoming fiscal year.
Tiger Brands’ operating profit also experienced a decline, as anticipated in October. It dropped by 9% to R3.1 billion for the year.
Earnings per share fell by 2% to 1,725 South African cents, contrasting with the 2-9% lower projection highlighted in October.
Last year, South Africa grappled with frequent power outages, known as load-shedding, attributed to insufficient investment in the country’s electricity infrastructure. This situation has led to a series of profit warnings from companies like Tiger Brands, Astral Foods, and Libstar, among others.
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