Tiger Brands reports higher revenue

Its diluted basic earnings per share rose by 13% to 736.6 cents per share from 650.6 cents.

Revenue picked up marginally to R10.45 billion, from R10.31 billion, with profit for the period at R1.17 billion, from R1.04 billion.

An interim dividend of 281 cents per share was declared, which represented an increase of 4% compared to the capital distribution of 270 cents per share declared in 2010.

The group said its operating margin reduced to 15% from 15.7%. The Rice, Sorghum and Babycare businesses, as well as International & Exports (excluding Deciduous Fruit), achieved good operating results, while the Milling & Baking and Beverages businesses produced a moderate improvement in operating income, it said.

The remaining businesses recorded declines in operating income, with Snacks & Treats and Personal Care producing disappointing results.

Within International & Exports, the sustained strength of the rand continued to negatively impact the performance of the Deciduous Fruit business. The strong rand also impacted on the translation of the results of the foreign operations Haco (Kenya) and Chococam (Cameroon), Tiger Brands said.

"Continued weak consumer demand coupled with rising cost pressures, including higher fuel and utility costs, were largely responsible for the subdued results recorded by most categories.

"Margins were negatively impacted by increased competitor pricing pressure in some categories, while the ability to fully recover cost increases was constrained by weak consumer demand.

"In addition, with Easter being approximately three weeks later in the current year compared to the prior year, some retailers delayed a portion of their Easter buy-in to April which negatively impacted some business segments," Tiger Brands said.

Domestic Food turnover grew by 1%, while operating income declined by 3%.

The Grains segment increased operating income by 5%, notwithstanding a decrease in turnover of 2%. This was driven primarily by the Rice business which benefited from relatively stable dollar-based raw material prices and a stronger rand.

The group said that the Wheat Milling business, as well as the Albany bakery business, experienced a reduction in volumes due to the difficult trading environment, which was exacerbated by significant price discounting by competitors in the market place.

Volumes achieved by the Groceries business reflected a "pleasing recovery" compared to the same period last year. This was driven by lower net realisations in an effort to rebuild market share.

A reduction in core business volumes, caused by aggressive pricing on dealer owned brands and competition from low priced regional offerings, negatively impacted the Value Added Meat Products business, it said.

Home, Personal and Babycare (HPCB) produced a disappointing overall result, with operating income declining by 4% on a 4% increase in turnover. The performance at an operating income level was adversely affected by an increase in overhead costs, higher marketing spend and once-off restructuring costs, Tiger Brands said.

Tiger Brands implemented its BEE Phase II transaction in October 2009. This transaction gave rise to a once-off charge in the six months to 31 March 2010 of 150.7 million rand after tax, which was disclosed as an abnormal item in the income statement.

Looking ahead, the group said it expected trading conditions to continue to remain challenging for the remainder of the current financial year.

"Nevertheless, the company is anticipated to benefit in the second six months from the efficiency improvements and other performance enhancing measures which have been implemented by management.

"In line with its strategy, the company continues to pursue value enhancing opportunities which will further increase its manufacturing and distribution footprint outside of South Africa," it said.