Tiger Brands Integrated Annual Report 2015

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Operational review continued
42 Tiger Brands Limited integrated annual report 2015
Rm 2015 2014
%
change
Turnover 10 108,1 9 464,4 7
Operating income* 1 095,9 977,3 12
Operating margin (%) 10,8 10,3
*Before abnormal items.
Performance
The division reported a pleasing performance with turnover
up 7% to R10,1 billion and operating income rising 12% to
R1,1 billion, despite challenging trading conditions and
higher input costs. The operating margin improved from
10,3% to 10,8%.
Groceries
With leading brands such as Koo, All Gold, Mrs Ball’s,
Black Cat and Crosse & Blackwell, Groceries recorded
an excellent financial performance for the year. Turnover
rose 7% to R4,3 billion (2014: R4,0 billion) while
operating income increased by 28% to R411 million
(2014: R320 million). Market shares improved across
most categories compared to the prior year, notwithstanding
pricing adjustments taken to recover costs and a fiercely
competitive trading environment.
In line with the ongoing focus on our manufacturing
facilities, the commissioning of the R230 million
mayonnaise facility in Boksburg, Johannesburg, was
completed in June 2015, with improved production and
supply chain efficiencies.
To maintain and improve market share, new product ranges
and variants are continually introduced across all major
categories. Recent innovations include KOO Chakalaka,
a traditional spicy vegetable relish, and the relaunched
Hugo’s brand, a more affordable offering backed by the
same quality guarantee as our premium brands.
The benefit of strategically investing in our brands was
evident in the group’s excellent 2015 rankings in the
Sunday Times top brands awards (page 24), with
KOO displacing international leaders as South Africa’s
favourite brand. KOO was also recognised as the number
one brand in the Ask Afrika Icon Brands survey. The
appeal of the Hugo’s brand is clear in its steady
progress into the top 10.
Snacks and treats
This business focuses on sugar confectionery: chocolate
(Beacon), gums and jellies (Maynard) and hard-boiled
sweets (Smoothies).
After a relatively subdued first half, annual turnover increased
by 4% to R2,1 billion (2014: R2,0 billion) and operating
income by 2% to R315 million (2014: R309 million).
Operating margin declined to 14,7% primarily due to
increased raw material costs.
Salient features
❍❍Successful Groceries turnaround evident in market shares
and improved profitability
❍❍Brand health evident from top awards (page 24)
❍❍Improved manufacturing performance
❍❍Groceries portfolio strategy implemented
– relaunch of Hugo brands
Segment overview
This division houses many of the group’s iconic brands and
includes Groceries, Snacks and Treats, Beverages, Value-
added meat products and Out of home.
Strategy
Entrench brand leadership and recover market share in
specific categories through improved operating
performance, innovation, cost efficiency and enhanced
manufacturing facilities.
Consumer Brands – food