Thumbs up for Tiger Brands' 'impressive' update

Tiger Brands reported in the update that it expected headline earnings per share from continuing operations to reflect an improvement of 18%-21% compared with the previous financial year.

The market consensus was that Tiger Brands — which is due to release its annual results to September on 24 November — would report an increase of 7.2% in headline earnings per share compared with the previous reporting period.

Earnings per share from continuing operations were expected to be between 43%-46% above those achieved in the 2009 financial year.

In separate interviews, the analysts said the earnings forecast was above expectations.

“It's a good set of results, certainly better than what the market had forecast,” said Absa Asset Management analyst Christopher Gilmour. “These are outstanding,” he said.

However, Tiger Brands said, despite the improved returns from its businesses, it had experienced a challenging trading environment during the past six months of the year under review.

It said the operating results for the full year benefited from a particularly strong performance by the group's grains business.

The higher percentage improvement in the earnings per share compared to headline earnings per share was also attributed to the inclusion of an abnormal amount of R201,1m, relating to the disposal of shares in drugs firm Adcock Ingram.

Tiger Brands also booked a capital profit of R62,1m from the disposal of its 73.16% interest in fish company Sea Harvest.

The period under review included a charge of R112,3m relating to the impairment of the carrying value of the goodwill association with the beverages business.

“They are better than what we expected. This was possibly due to slowing food inflation having a stronger impact on margins than anticipated,” said Sarah-Jane Alexander, investment analyst at Coronation Fund Managers.

“It looks like a strong set of results boosted by the performance of the grain business,” she said.

“This was also supported by the Pioneer Foods trading statement,” Alexander said.

Pioneer Foods recently issued a trading statement for the year to September in which it said headline earnings per share were expected to between 350c and 450c, an increase of up to 39% compared with the previous year.

Tiger Brands stock on Friday closed 0.13% lower at R155,80.

Source: Business Day

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