South Africa's largest food producer Tiger Brands delivered robust annual results with earnings up 51%, despite tough trading conditions and significant input cost inflation.
In its year-end results, the maker of Jungle Oats and Tastic rice, said on Friday its profit for the year to end September was R2.85 billion, an almost R1bn increase.
Total revenue from continuing operations increased by 10% to R34bn, boosted by price inflation of 11% and a marginal overall volume decline of 1%.
Earnings per share from continuing operations increased by 65% to 1 762 cents, while headline earnings per share from continuing operations increased by 51% to 1 702 cents (2021: 1 127 cents).
It declared a full-year dividend to shareholders of 973c, an 18% increase over the previous year, and representing about an R1.75 billion payout. Its final dividend came in 29% higher at 653 cents.
Group operating income, before impairments and non-operational items, increased by 53% to R3,4bn. In addition, about R1.5bn was returned to shareholders through a share buyback programme.
Tiger Brand CEO Noel Doyle said: “The operating environment this past year has remained tough, with ongoing supply and cost challenges exacerbated by prolonged periods of load shedding. Consumer households also continue to face sustained pressure. However, despite these challenges, we have not only delivered a credible set of results, but have also maintained focus on investing in the future to ensure sustainable long-term returns and build societal value".
Tiger Brand said it was able to raise selling prices by 11% in its 2022 year, although it did experience a slight dip in volumes in its domestic business.
On price increases, Doyle said the company has had challenging conversations on price increases with retailers.
"In regards to the price increases, you need to bring your A-game justification for it. Retailers have a lot of visibility in terms of their house brands, into what your cost space looks like, and if you don't have your ducks in a row around facts and motivation on price increase, you won't be entertained. We haven't had any serious stop-supply issues with customers over price increases. It's been tough, but it's been tough quite a while," he said.
Tiger Brands said its deciduous fruit business benefited from improved global fruit pricing and a weaker exchange rate.
"Volume growth in Exports and International (divisions) was offset by volume declines in the Domestic Business, primarily attributable to Milling and Baking, Snacks & Treats, Baby, as well as Home and Personal Care."
Tiger said these volume declines were partially offset by good volume growth in rice, beverages, groceries, and out-of-home categories," the group said.
Doyle said loadshedding had no impact in terms of first-quarter volumes for the company.
"We have invested over a period of time in excess over R350m to generator capacity to be put in place. The challenge could be in going forward if some of our inbound suppliers don't have the same level of backup generator capacity, then you get sustained load shedding where you end up with diesel shortage, that's where you'll end up concerned about, but overall, we have been able to, with the help of our suppliers, mitigate any sort of significant loss," he said.
The group said the maize’s performance was adversely impacted by continued volume pressure and volatile raw material prices. Within Consumer Brands, it said all segments delivered top-line growth with a particularly strong performance from Out of Home as the business recovered in line with post-lock-down demand.
"Overall revenue in Home and Personal Care (HPC) declined by 5% to R1.9bn, primarily due to lower volumes in the pesticides segment within Home Care.
Looking forward, Doyle said the outlook remained challenging in line with the macro environment.
"We remain optimistic about short-term prospects, and in the long run, we can see the rest of the continent become a significant growth driver as well as South Africa.
On Friday the shares closed 0.72% higher at R190.59.