Scribd Logo
Upload

Welcome to Scribd!

  • 121 views

    Tiger Brands' Road To Recovery - Fin24

    Uploaded by

    Byron Jason
    Tiger Brands' share price has fallen significantly since the listeriosis outbreak linked to one of its subsidiaries, Enterprise Foods. Tiger Brands has recalled and destroyed 4000 tons of products at a cost of R415 million, and closed three plants as it works to remedy its facilities. It faces further costs from class action lawsuits related to over 200 deaths from listeriosis. Analysts estimate the direct costs to Tiger Brands' income statement could be between R800 million to R1 billion, and a potential class action settlement between R1 billion to R2 billion. Other divisions like grains, consumer brands, and its business in Nigeria have also struggled.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Tiger Brands' Road To Recovery - Fin24

    Uploaded by

    Byron Jason
    121 views4 pages
    Tiger Brands' share price has fallen significantly since the listeriosis outbreak linked to one of its subsidiaries, Enterprise Foods. Tiger Brands has recalled and destroyed 4000 tons of products at a cost of R415 million, and closed three plants as it works to remedy its facilities. It faces further costs from class action lawsuits related to over 200 deaths from listeriosis. Analysts estimate the direct costs to Tiger Brands' income statement could be between R800 million to R1 billion, and a potential class action settlement between R1 billion to R2 billion. Other divisions like grains, consumer brands, and its business in Nigeria have also struggled.

    Original Description:

    tiger brands

    Original Title

    Tiger Brands’ road to recovery | Fin24

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Tiger Brands' share price has fallen significantly since the listeriosis outbreak linked to one of its subsidiaries, Enterprise Foods. Tiger Brands has recalled and destroyed 4000 tons of products at a cost of R415 million, and closed three plants as it works to remedy its facilities. It faces further costs from class action lawsuits related to over 200 deaths from listeriosis. Analysts estimate the direct costs to Tiger Brands' income statement could be between R800 million to R1 billion, and a potential class action settlement between R1 billion to R2 billion. Other divisions like grains, consumer brands, and its business in Nigeria have also struggled.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    121 views4 pages

    Tiger Brands' Road To Recovery - Fin24

    Uploaded by

    Byron Jason
    Tiger Brands' share price has fallen significantly since the listeriosis outbreak linked to one of its subsidiaries, Enterprise Foods. Tiger Brands has recalled and destroyed 4000 tons of products at a cost of R415 million, and closed three plants as it works to remedy its facilities. It faces further costs from class action lawsuits related to over 200 deaths from listeriosis. Analysts estimate the direct costs to Tiger Brands' income statement could be between R800 million to R1 billion, and a potential class action settlement between R1 billion to R2 billion. Other divisions like grains, consumer brands, and its business in Nigeria have also struggled.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 4

    NEWS24 | OLX | PROPERTY24 | CAREERS24 | SPREE | AUTOTRADER |

    Home Companies Markets Budget Economy Money Entrepreneurs Tech Business Insider Finweek Opinion

    Loading...

    Tiger Brands’ road to recovery


    Most Read
    Jun 05 2018 10:26 Lloyd Gedye

    ■ New era for healthcare as Motsoaledi wants c…


    ■ 8 things you need to know about the National…
    Tiger Brands’ share price “still has a long way down”, says
    Rob Pietropaolo, private client trader at Unum Capital. ■ 6 ways the NHI bill will affect consumers' poc…
    ■ Job losses can be avoided with National Mini…
    In May, the group released its results for the six months to
    31 March – its first results following the news that the ■ Disrupt SA's elite, says political analyst
    listeriosis outbreak in South Africa could be linked to a
    strain found in facilities owned by Enterprise Foods, one if
    its subsidiaries.

    With its share price at a peak of R474.50 in January, it is


    currently trading at around R335 per share. Its market cap
    is down R27bn since January to around R64bn at the time
    of writing, Wayne McCurrie, senior portfolio manager at
    Ashburton Investments, points out.

    To date, Tiger Brands has recalled and destroyed 4 000


    tonnes of value-added meat products (VAMP), costing the
    company R415m, according to its chief financial officer,
    Noel Doyle.
    Tiger Brands. (Iavan Pijoos, News24)
    “On a daily basis, we are incinerating products,” said CEO
    Lawrence MacDougall. RELATED ARTICLES
    Pig farmers 'pray' as Tiger Brands
    It has also closed three plants, and Tiger Brands has since shuts plants after deaths
    spent R50m in remediating its facilities. According to
    Doyle, the food giant is planning to have all its facilities Tiger Brands seeks new food
    reopened by September this year. Floors have been safety standard
    replaced and changes to process flows have been Zambia partially lifts ban on SA
    implemented. listeriosis-risky food

    “We have changed how we move products from one place


    to another,” he says.

    Despite the closures, Tiger Brands has maintained its 1 600 permanent employees. Carrying these
    costs while facilities are not in production is a challenge, making it critical to get facilities back up
    and running as soon as possible, says Doyle.

    The listeriosis news broke at the beginning of March, and therefore only four weeks of closures
    have been included in the recent set of results. Volumes in VAMP have dropped by 12% over the
    period and revenue by 16%, delivering an operating income of R133m.
    “These closures have already seen [operating] income plunge almost 80%, so the longer they stay
    closed, the worse it gets for Tiger Brands,” says Pietropaolo.

    “Their forward guidance was also somewhat bleak, expecting trading conditions to remain tough for
    the rest of the year.”

    The cost of a class action


    McCurrie says Tiger Brands is likely looking at a direct cost of R800m to R1bn to its income
    statement, before it even gets to the class action lawsuits relating to the listeriosis outbreak, which
    to date have resulted in over 200 deaths.

    There are currently two class actions in motion, and the two cases are expected to be combined
    into one, says Doyle, adding that Tiger Brands’ insurance lawyers are close to the process. He
    believes the company has appropriate cover to respond to the crisis.

    “Just how big the settlement [relating to the two class action lawsuits] will be, is anybody’s guess,”
    says Pietropaolo.

    McCurrie points to a potential settlement figure of between R1bn and R2bn, and suggests that Tiger
    Brands should choose to settle the class actions rather than have them drag on for years.

    “That would be the quickest way to repair your brand and truly put this thing behind you,” says
    McCurrie.

    Other bad apples


    Doyle argues that Tiger Brands sees the current performance as a “fairly satisfactory environment”,
    given the level of deflation in the market.

    The company’s revenue for the period was down 4% year-on-year to R15.7bn. According to Tiger
    Brands, had the impact of the recall been removed, revenue would have been down by 2%.

    Tiger Brands also identified “specific challenges” in its grains, consumer brands, home and personal
    care (HPC) and Langeberg & Ashton Foods (LAF) divisions, which it said significantly impacted on the
    group’s overall performance.

    Volumes at LAF, its deciduous fruit business, dropped 22.9%, and revenue by 23%.

    It reported an operating loss of R72m, a decrease of 337% on last year’s operating profit of R30m.
    The poor performance in this division was largely down to the drought in the Western Cape and the
    subsequent lack of volume to sell, according to Doyle. “Yields were poorer,” he says. “That was the Follow on Follow on
    biggest driver.” facebook twitter

    Volumes at its HPC division were down 12%, and revenue down 16%. Operating income, at Watch on Receive
    R133m, was down 46% year-on-year. YouTube our
    newsletter
    While Doyle also cited an intense price war between Clicks and Dis-Chem, he says the major
    reason for the poor performance in this division was grain. Contact Us

    According to Doyle, Tiger Brands’ Deli Foods in Nigeria has faced 24 months of significant
    downturn, linked to the devaluation of the naira and the deep recession that followed the oil price
    collapse. 21 June issue
    “We haven’t found the right way to recover that business,” says Doyle, adding that Tiger Brands had
    made some management changes at Deli Foods and would like to still make some more.

    “We are looking at it carefully,” he adds.


    This article originally appeared in the 7 June edition of finweek. Buy and download the magazine
    here, or sign up for our weekly newsletter here.

    Paid Content Recommended by

    The Evolution of the Dark Why Cyber Security Threats ‘The opportunity is massive’:
    Web & How It Has Evolved. Are Like a Box of Chocolates 7 of 8 People Are Clueless
    Radware Blog Radware Blog About This opportunity
    Financial Post

    Subscribe to finweek
    15 Forbidden Places Around Estate Agents Hate This New Microsoft's Next Big Thing Is
    the World That You Can Way People Are Selling Rattling The Tech Industry
    Never Visit Properties zippyjazz.com
    farandwide MzansiReview

    More from Fin24 Recommended by

    We must rein in our Molefe to cut 'deep claws' of SA to cut 'Gupta clause' in
    increasingly violent kids corruption at Transnet Mining Charter, Gwede
    Mantashe says

    Bank looking for beneficiaries Your guide to alternative JSE’s weakening reflects tough
    of R160m unclaimed policies investments times

    WHAT TO READ NEXT


    6 ways the NHI bill will affect Damning legal report lays bare
    consumers' pockets Molefe, Singh's roles in
    Transnet deal

    OPEC rift deepens as Iran Further blow for billionaire


    walks out of key meeting Wiese as Brait struggles with
    losses

    Impossible to calculate how Transnet bosses liable for rail


    much NHI will cost - deal losses, probe concludes
    Motsoaledi

    Read more about: tiger brands | enterprise foods | listeria listeriosis

    SHARE THIS PAGE Please share ×


    Tweet
    your feedback
    Yahoo! Google Digg del.icio.us Facebook

    We are conducting a
    quick survey to better
    SERVICES understand our
    audience. Click here for
    Money Clinic RSS Feeds Newsletters Contact us
    the Privacy Policy
    Get your financial questions News delivered really simply. You choose what you want. Lost? Confused? Problems? Let
    answered. us help you.
    Continue

    Data supplied by: Cancel


    RSS feeds | Terms & Conditions | Advertise on Fin24 | About us | Contact us

    You might also like