South Africa’s Tiger Brands has reshuffled its organisational structure into six business units with an aim to “improve profitability”.
The food group has created units for bakeries, grains, culinary, treats and beverages, home and personal care, snacks and baby food, divisions which will all report to the CEO under individual executives.
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Tiger Brands added that it is restructuring below the newly appointed managing directors for the different units. It wrote in a trading update that it anticipates the second part of the restructure to be completed by the end of its second quarter.
The group also stated: “The renewed focus on rationalising SKUs will reduce complexity, resulting in manufacturing and procurement efficiencies in due course. Additionally, achievements in portfolio and SKU rationalisation are expected to reduce the number of brands requiring support, allowing for more focused investment yielding a higher return on investment.”
In the filing, the company said: “Tiger Brands’ domestic performance reflects the difficult trading environment, with inflation in food and non-alcoholic beverages rising ahead of CPI. Prices of essential items such as sugar, vegetables, meat, eggs, and rice surged by almost 20% (Stats SA). As a result of the higher inflation over the period, consumer shopping habits shifted towards buying more on promotion and limiting their spend to essentials.”
Group revenue for the four months ended 31 January 2024 declined by 1% year-on-year, driven by volume declines of 8% offset by price inflation of 7%. The grains unit experienced volume regression across all segments, “due to a difficult trading environment”, the group wrote.
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By GlobalDataWithin the consumer brands division, year-on-year volume growth was achieved in the snacks and treats and baby segments, as well as “strong volume growth” in beverages.
Groceries experienced volume regression due to “absolute volume declines across categories”.
In Tiger Brands’ full-year results to 30 September, it reported a 10% increase in revenue to R37.4bn ($2bn) but pointed to “low to no growth” in the new fiscal year.
Tiger Brands’ operating profit also fell in the year, as was anticipated in October. It dropped 9% to R3.1bn.
Earnings per share declined 2% to 1,725 South African cents, compared to the 2-9% lower print flagged in October.
South Africa was plagued by so-called load-shedding, or power outages, last year linked to a lack of investment in the country’s electricity infrastructure. A raft of profit warnings have ensued, including from Tiger Brands and peers such as Astral Foods and Libstar.
