DURBAN – TIGER Brands, South Africa’s biggest food producer, yesterday restored the payment of an interim dividend after putting it on hold last year due to the uncertainty created by the Covid-19 outbreak as it reported a 21 percent hike in earnings.
The group, with brands such as Koo, Fattis and Monis, Jungle Oats, Oros, among others, declared a dividend of 320 cents a share during the period.
The declaration of a dividend comes after the South African packaged goods company reported a 21 percent increase in headline earnings per share (Heps) from continuing operations to 741c.
Chief financial officer Deepa Sita said last year that the board took a decision to defer the dividend payment until the year-end results, given the uncertainty at the time related to the Covid-19 lockdown measures.
“However, the board has approved and declared an interim dividend of 320c in this year’s results due to an improvement in operational performance,” Sita said.
Sita said the performance was supported by strong revenue growth in the first quarter while cost saving and efficiency initiatives gained traction across all segments of the portfolio.
Tiger Brands also declared a dividend of 670c in the year to end September 2020, which included a special dividend of 133c, as a result of the once-off proceeds received from the disposal of its value-added meat products (Vamp) business.
The Vamp business has been treated as a discontinued operation during the period following its disposal.
Tiger Brands sold the Vamp business in two separate transactions for R428 million to Molare and Silver Blade Abattoir last year.
In the results, revenue from continuing operations increased by 8 percent to R16.4 billion, supported by price inflation of 9 percent, but was offset slightly by an overall volume decline of 1 percent and operating income increased by 16 percent to R1.6bn.
Its cash generated from operations increased by 15 percent to R1.7bn.
The second quarter performance was interrupted when the government tightened its Covid-19 lockdown measures towards the end of 2020 during the second wave of the pandemic.
“Tiger Brands experienced a small impact during the second wave as we were proactive on how we conducted business. We put measures to mitigate the impacts of the pandemic, however, we remain concerned about the potential of a third wave in our operations,” Sita said.
Tiger Brands operates grains, consumer brands, home and personal care (HPC) and exports and international divisions. The grains business reported a 10 percent increase in revenue to R7.5bn and a 16 percent increase in operating income to R619m, supported by the improved performances of the oat-based breakfast segment, rice and pasta.
In the HPC division, revenue increased by 6 percent to R1.1bn and operating income was up by 15 percent. The exports and international division reported an 18 percent increase in revenue to R1.8bn while operating income increased by 58 percent to R85m. The consumer brands division reported a 4 percent increase in revenue while operating income was up by 19 percent.
Looking ahead, Sita said the group expected an improvement in the second half of the financial year despite a decline in the second quarter reported across their categories.
“However, we are confident that operating income will show improvement in the second six months, relative to both the second half of 2020 and of 2019,” she said.
Tiger Brands’ shares closed 3.14 percent higher at R225.87 on the JSE yesterday.