Tiger Brands

Chile: Empresas Carozzí

Empresas Carozzí is a leading branded food business in South America, based in Santiago, Chile. It also has significant manufacturing operations in Lima, Peru and an operation in Argentina.

The company recorded a satisfactory consolidated performance for the review period, with profit similar to the prior year and a 3% increase in its operating margin.

The performance of the businesses in Chile and Peru improved year on year despite the weak economic situation in these countries.

Underlying performance was again affected by the agro-industrial division, which faced lower global prices in tomato paste, fruit purees and apple juice concentrate, and a revaluation of the Chilean peso against the American dollar.

The populist policy changes implemented by the Chilean government continue to impact local consumer demand and business confidence. Similarly, political and economic challenges in Brazil and Venezuela are constraining regional export opportunities.

The hallmarks of Carozzí 's success include its exceptional innovation capability, strong number 1 or number 2 brands in the relevant categories, depth of market penetration and efficient manufacturing capability. The business is therefore well placed to continue competing effectively.

Nigeria: UAC Foods

UAC Foods is a leading manufacturer and marketer of convenience foods in Nigeria. Its brands span a broad spectrum of the country's food market, specifically snacks, dairy products and beverages.

The snacks category comprises Gala sausage roll, the category leader in Nigeria, Funtime cupcakes and coconut chips. The dairy category comprises the Supreme range of ice-cream products. Brands in the beverage category include Swan natural spring water.

Given the weaker Nigerian economy, competitors continue to use aggressive pricing strategies to maintain volume and factory throughput amid suppressed consumer demand.

Cost increases from a weakening Nigerian naira have been significant, and only some of these could be recovered through price increases. Despite this, gross margins were maintained by adjusting the Gala sausage roll price and pack-size architecture.

Challenging macro-economic conditions are likely to persist into FY18, resulting in a muted outlook for this business.

South Africa: Oceana

Oceana is a leading fishing company, listed on the JSE.

Oceana's financial performance has primarily been impacted by the negative effect of a stronger rand on export and foreign revenues, lower global fishmeal and oil prices, and slowing South African consumer spend on non-staple foods. The decrease in operating profit was exacerbated by the adverse movement in net foreign exchange, from a gain of R73 million in 2016 to a loss of R61 million in the current year. These movements were primarily due to the effects of forward exchange contracts to cover the cost of imported frozen fish from the canned fish business. In addition, improvements in the cost base due to group-wide procurement efficiencies have been offset by reduced pilchard landings, and lower Commercial Cold Storage (CCS) occupancies in Gauteng. Prior-year operating profit also benefited from proceeds on the disposal of Lamberts Bay Foods and the CCS fruit business.

Headline earnings for the year ended 30 September 2017 decreased by 44% after a 42% reduction in operating profit.

Zimbabwe: National Food Holdings Limited

National Foods is a leading branded food manufacturing company in Zimbabwe. The country continues to be impacted by macro-economic weaknesses, particularly foreign currency shortages that create challenges for importers in settling foreign creditors. National Foods was largely able to manage these challenges during the year with the assistance of the Reserve Bank, as it was accorded priority as a producer of basic commodities.

Volume performance and profitability were affected by a very poor result from the maize division where volumes declined by 39% on last year after more subsidised maize was provided to consumers by the government following the disappointing 2015/16 harvest. Excluding maize, the group grew volumes by over 7%.

During the year, National Foods disposed of its depot network to a third party, which will convert these stores to fully fledged wholesale outlets. This will allow the group to focus on growing its core light manufacturing activities.

The outlook for the Zimbabwean economy is increasingly challenging. Foreign currency constraints are expected to persist for some time making the operating environment even more difficult.

* From continuing operations.