Tiger Brands: Integrated annual report 2019

SALIENT FEATURES

	Groceries’ sales ahead of market with revenue up 7%			Absolute revenue and operational efficiencies negatively impacted by strike action early in the year
	Gains in market share across all segments within Beverages			Challenges in reopening VAMP, with launch logistics adversely impacting service levels
	Strong performance from Oros and Energade contributes to double-digit volume growth in Beverages			Revenue growth and share gains in Snacks and Treats, diluted by higher conversion costs

Consumer Brands – Food has continued to feel the impact of the Valued Added Meat Products (VAMP) operation. Excluding VAMP, the division delivered solid growth across the businesses, with Beverages enjoying a particularly strong performance. Total revenue increased 9% to R9,4 billion, underpinned by 3% price inflation and 6% volume growth, while operating income fell by 4% to R1,0 billion (excluding VAMP).

At Groceries, revenue was up 7% to R5,1 billion, underpinned by volume growth of 4% and price inflation of 3%. Despite this higher top-line growth, operating income was down 25% to R325 million, reflecting the impact of the three-week strike at the start of the financial year as well as supply challenges.

Revenue at Snacks and Treats increased 9% to R2,3 billion, off the back of 5% volume growth and average price increases of 4%. Growth was recorded across the portfolio, with the relaunch of Beacon and Maynards supported by focused marketing investment and successful in-store activations. Operating income was up 3% to R313 million.

The Beverages business delivered another year of strong revenue growth with revenue up 19% to R1,5 billion, fuelled by a pleasing 14% volume growth, ahead of category growth. Market share gains were achieved as a result of effective in-store activations, strong marketing campaigns throughout the year and new launches performing ahead of expectations. Operating income rose 39% to R296 million, benefiting from recent investments in the plant. In addition, we gained market share across all segments in beverages with the exception of ready-to-drink.

Revenue at VAMP was down 39% to R654 million, impacted by challenges in managing the factory’s reopening and product launch logistics. Despite excellent brand equity, revenue was impacted by distribution gaps and tactical pricing strategies. The lower factory throughput and delayed reopening, together with higher raw material costs, led to an operating loss of R547 million (2018: R252 million).