Tiger Brands Integrated Annual Report 2015

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40 Tiger Brands Limited integrated annual report 2015
Operational review
Rm 2015 2014
%
change
Turnover 11 375,4 10 948,6 4
Operating income* 2 060,8 1 918,9 7
Operating margin (%) 18,1 17,5
*Before abnormal items.
Milling and Baking
The bakeries business reported a modest increase in
operating income, despite competition intensifying
significantly. Volumes declined 3% in the first half, but
recovered to growth in the second half, reflecting a
measured response focused on the attributes of the Albany
brand and supported by tactical pricing initiatives. In the
second half, Albany regained its volume and value market
share leadership.
International wheat prices declined during the year.
However, this has been offset by the increase in the local
wheat tariff, which was introduced in October 2014 and
has subsequently increased by 480% from R157 per ton to
R911 per ton. This, together with the impact of a weaker
rand, has resulted in a significant increase in local wheat
prices. Despite these developments, the wheat milling
business delivered another solid performance, growing
operating income and volumes. Margins improved modestly.
The maize price increased by 65% from January to
September, reflecting drought in many producing regions.
Despite this, maize milling reported strong growth in
operating income and revenue. This performance was
supported by ongoing product enhancements after
upgrading the Randfontein mill in the prior period.
The performance of the sorghum and maize breakfast and
beverage business was affected by delays in a capacity
expansion capital project.
Salient features
❍❍Strong performance despite trying conditions
❍❍Market leadership restored in bread category
❍❍Jungle Ultra launched in fast-growing energy segment of
breakfast market
Segment overview
The Grains division recorded a 7% rise in operating profit for
the year to R2,1 billion, with operating margins of 18,1%.
Strategy
In line with the group’s strategic objective to profitably
defend and grow our market share, the Grains division
increased its marketing investment by 24% after a 25%
increase in the prior year to support the sustainable
performances of businesses in this division.
Performance
Grains
Noel Doyle
Chief operating officer