- Shares fell by -7.59%
- “Lower volumes generally, coupled with the inability to fully recover input costs, have adversely impacted profitability.”
- The Group is in the process of disposing off the VAMP business, which was forced to temporarily close manufacturing facilities due to a listeriosis outbreak in 2018.
Tiger Brands Limited, a South African food and beverages company with a 37% shareholding in Zimbabwe Stock Exchange-listed National Foods Limited has seen its shares falling by -7.59% following the release of its trading update for the six months ending 31 March 2020.
According to the Group’s trading update, Headline earnings per share (HEPS) from total operations is expected to be between 533 cents and 478 cents, which is between 30% and 37% lower than the 762 cents reported for the corresponding period last year.
Earnings per share (EPS) from total operations is expected to be at least 36% (or 311 cents) lower than the 864 cents reported for the same period last year.
Meanwhile, EPS and HEPS from continuing operations (including VAMP) are expected to be at least 35% and 36% lower compared to the corresponding period.
“The information above reflects a challenging first quarter, where revenue from continuing operations, amounting to R8.4 billion, was in line with the comparable period last year, driven by selling price inflation of 4% offset by an overall volume decline of 4%,” the Group said.
“Lower volumes generally, coupled with the inability to fully recover input costs, have adversely impacted profitability.”
The Group said the quarter’s performance was also significantly impacted by the ongoing challenges within the Grains portfolio, particularly affecting Bakeries, Pasta and Rice. In addition, the Export division was significantly impacted by a legal dispute with a former distributor in Nigeria, resulting in virtually no sales into that country.
“The negative export performance was further exacerbated by ongoing foreign exchange liquidity issues in other export markets,” Tiger Brands said.
The Group said that it is in the process of disposing off the VAMP business and “good progress has been made in this regard, however, several issues are subject to clarification and discussion between the various parties and, as such, no definitive agreements have been concluded at this stage.”
The VAMP business includes brands such as Enterprise, Renown, Mielie-Kip and Bokkie. It is the same business that was forced to temporarily close manufacturing facilities due to a listeriosis outbreak in 2018.
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