Consumer Brands - Food

SALIENT FEATURES

EXCEPTIONAL PERFORMANCE FROM GROCERIES, WITH OPERATING INCOME UP

26%
CONSUMER BRANDS – FOOD'S OPERATING MARGIN IMPROVED 60 BASIS POINTS TO
11,5%
Brands
Groceries – KOO, All Gold, Crosse & Blackwell, Black Cat, Mrs Ball’s, Hugo’s, Colmans
Snacks, treats and beverages – MMMallows, Beacon, Maynards, Allsorts, Jelly Tots, Jungle Energy Bar, Wilsons, Toff-O-Luxe, XXX, Fizzpop, Damascus, Smoothies, Oros, Energade, Hall’s, Rose’s, Monis, Game
Value-added meat products – Enterprise, Renown, Mielie-Kip, Bokkie

Marginal increase in revenue and 7% increase in operating income reflect a number of challenges during the year, but strong performance from Groceries.

Performance

With the exception of the Groceries business, Consumer Brands – Food faced several challenges during the year, noted below. As a result, revenue increased marginally to R11,1 billion, operating income grew 7% to R1,3 billion and the operating margin improved from 10,9% to 11,5%.

The Groceries business recorded revenue growth of 7% while operating income rose 26% to R589 million. Operating margins improved to 11,8% from 9,9% on improved pricing and cost reductions.

Sales volumes in Snacks and Treats were affected by industrial action, a contracting market with aggressive competition and product rationalisation in the first half. Revenue declined 5% to R2,2 billion, but improved gross margins contributed to operating income rising 2% to R324 million. This business will focus on volume recovery in the year ahead.

Although the Beverages business recovered in the second half after significant challenges in the first half (industrial action, drought-related water restrictions and electricity disruptions), full-year revenue declined 9% and operating income by 8% to R144 million. The outlook for this business is, however, encouraging as the launch of Oros ready-to-drink gains momentum.

In our Value-Added Meat Products business, lower sales volumes reflect higher selling prices and aggressive competition. Revenue rose marginally to R2,2 billion, while operating income dropped 34% despite initiatives to counter significant raw material inflation.