August, before it dropped slightly. This followed on the success it achieved with a number of steps taken to increase profitability. Its net profit for the year to September improved by 91% compared to the previous year. Its policy to focus more on profitable specialised packaging products in Europe and North America is increasingly bearing fruit.
Tiger Brands, South Africa’s largest food group, acquired a new CEO in Lawrence MacDougall in May. He must still prove himself, but the market has high hopes for him, which partially led to the share price recently reaching a new high. MacDougall ordered a comprehensive strategic review of the group shortly after his arrival, which is expected to be completed in April. Cost-cutting is one of his priorities with which he’s had a measure of success. He also indicated that he believes the group should unlock more value from its established brands such as the Jungle, All Gold and Koo product ranges.
The group could also be given a profit boost next year with the price of maize and wheat having already dropped by almost a quarter. Should we have good rains, the downward trend could continue, which would reduce the group’s input costs quite considerably. The prices of many products have increased substantially on supermarket shelves through increased input costs owing to the drought, but as in the past, it is unlikely that the food groups would pass lower prices on to the consumer. In other words, profit margins could widen considerably. (Also see page 39.)
Among the weakest shares, we still have Lonmin and PPC, which lie the furthest below their long-term EMAs, while the Choppies retail group of Botswana has apparently lost investors’ confidence. Gold shares, which have until recently been so popular, have also weakened to such an extent that it once again proves how speculative (and dangerous) any runs in gold shares could be.
their long-term EMAs.