Sign up for our free daily newsletter


Get the latest news and some fun stuff
in your inbox every day

Tiger Brands 6M - Hurt by Listeriosis

Fast Moving Consumer Goods company Tiger Brands warned us on the 9th November that the earnings would fall between 25% and 30%. The main reason was the listeria outbreak and provisions related to it. On Thursday the company released their results and it looks like things have gone from bad to worse with earnings down 26%.

Tiger Brands revenues were down 9% to R28.5 billion with their operating income seeing a bigger slide as it was down 28% to R3.3 billion. A big part of this drop was due to the listeria outbreak coupled with increased competition from no-name brands and our sluggish economy. Consumer Brands revenues were down 3% after seeing volumes go the wrong way.

Gone are the days where brand companies with the biggest marketing budget wins the hearts and minds of consumers. Social media has presented a direct platform for newcomers to reach targeted consumers in real time and at a fraction of the price.

Companies like Estee Lauder have cut their tv spend by 100% and they use their marketing budget to empower social media influencers directly on Instagram to move their products.



The company had to write down a further R132.7 million in inventories directly related to the listeria outbreak in their Value Added Meat Products. This gave rise to a big loss of R422 million.

The revenues from exports and international business were down 10% to R3.8 billion and operating income also down 32% to R270 million. The contributor here was low fruit yields after the Western Cape drought, meaning they didn't sell the volumes they wanted to. Exports revenues were the only division that saw a rise in revenues, up 4% to R1.8 billion.

Shares of Tiger Brands were up a lot on Thursday, as the company decided to keep the dividend at last years levels, and the company have decided to unbundle their entire stake in Oceana. Management reiterated their focus in the core food business and to regain market share. Tiger Brands is officially in turnaround mode, a process that might take a while as we saw with the Dangote Flour Mills debacle.


Other recommended stocks     Other stories about TBS