Tiger Brands released its interim financial results on Thursday, which revealed that its first-half profit took a hard knock after the listeriosis outbreak. The company is now on its financial bottom line. The listeriosis outbreak has claimed more than 200 lives thus far, and the Tiger Brands factory in Polowane was confirmed as the main source of the deadly outbreak.
In the wake of the outbreak, the Polokwane processing facility had to be shut down and a major recall of processed meat products from shelves, cost the food manufacturer a R363-million loss.
Tiger Brands is also facing legal claims in the Listeriosis Class Action in which victims of the those who have lost family members to the company’s listeria-tainted products are suing Tiger Brands.
The company said that its pretax profit from continuing operations declined to 18%, which equates to R1.9-billion, in the last six months. When excluding abnormal product recall costs, pretax profit from continuing operations falls to two percent (or R2.3-billion). The gross profit margin widened by 80 basis points, to 33.3%.
Group revenue from continuing operations declined four percent to R15.7-billion, after being hit by price deflation and falling volumes. The company said that its home and personal care division, as well as its deciduous fruit division, also influenced its performance.
Headline earnings per share (HEPS) dropped by 16% to R8.68. Headline earnings are a measurement of a company’s earnings that are based solely on their operational and investment activities.
Tiger Brands expects no meaningful recovery in its international markets, and is also expecting stiff competition from the local market.
Its processed meat facilities will remain suspended for most of the second half of the year, as it is completing remedial work and awaiting guidance from the Department of Health.
The food manufacturer remains committed to its plan to stay committed in protecting both its clients and processing plants from listeria monocytes by taking the following steps:
– Destruction of recalled product by incineration – safest method
– Proactively facilitating a multi-stakeholder forum for a sustainable solution
– Taking a systematic approach to re-opening facilities
– Environmental standards facilitated by international food safety specialist with extensive listeria management experience
– Partnering with academia to remain at the forefront of scientific developments and trends
– Refresher training on food safety and quality
– Engaging Government for standards relevant to South Africa’s unique context