Tiger Brands interim earnings up 15%

An interim dividend of 15% was declared, up 15% on the same period last year.

Turnover grew 18% to R9.4 billion and operating income was up 15% to R1.3 billion.

Tiger Brands, which took more than R150 million in fines over the past few months for two separate anti-trust violations, said earnings were impacted by the R53.2 million fine paid after its medicines supplies unit, Adock Ingram Critical Care, admitted a role in the fixing of drug prices supplied to hospitals.

If the penalty is stripped out of the results, the group's headline earnings per share - a key profit measure for local companies - would have reflected a growth of 19.8%, the group said.

Last year, the group suffered a R99 million fine for fixing the price of bread in the Western Cape. The fine was provided for in the 2006-2007 financials results.

Tiger Brands also grappled with high global increases in food commodities and fuel costs, but said an 18% rise in turnover was achieved by "significant" levels of selling price inflation and good volume growth across its FMCG basket.

"While selling price inflation in the balance of the business was contained to single digits, the substantial increases in the global soft commodity prices resulted in exceptional cost pressures in the Grains businesses with a concomitant impact on selling prices," the group said.

The contraction in the operating margin, from 13.9% last year to 13.6% in the current period, reflected the challenges encountered in recovering raw material cost increases in the milling and baking operations, and the impact of the cool and wet summer conditions on the beverages business, the company said.

The group said its FMCG business continued to face a tough trading environment due to slowing consumer demand, rising global prices of soft commodities and other key raw materials.

"It is likely therefore, that the growth in operating income for the full year ending September 30 2008 will be lower than that recorded for the first six months," the group said.

Source: I-Net Bridge

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