Tiger Brands Full Year Numbers - Steady as she goes

On Monday Tiger Brands released their full-year numbers. The share price originally sold off over 3%, but over the last two days it has recovered and then some. Tiger Brands continued the recent theme from corporate South Africa of impairing assets from acquisitions. In Tiger Brand's case, it is a R560 million impairment which is not as significant as we saw from the likes of Brait and Famous Brands. In this case, they had an impairment of R300 million on their Davita asset, which they bought for R1.35 billion in 2011. Then a R250 million impairment on their 49% stake in UAC Foods, a JV with listed UAC Nigeria.

Here are the numbers, Revenue is up 2% to R31.3 billion, HEPS are higher by 2%, operating margin grew by 110 basis points to 14.8% and volumes dropped by 3%. Higher margins with lower volumes which results in flat revenues is a good place to be in general.

All their divisions grew margins except their 'Exports and International' unit, which was hurt by a strong Rand and challenging trading environment due to capital constraints in certain countries. Which is exactly the same thing Shoprite and Famous Brands said about their Rest of Africa operations.

We don't think that Tiger Brands will shoot the lights out in the short term, we would need a big uptick in local GDP growth. If there is any sign that local consumer confidence improves, expect a good move higher from the stock. They are a defensive holding for now, who pay a reasonable dividend and will continue to provide families with familiar brands for generations to come. Happy to hold.