Consumers put Tiger in their tank in pandemic

Tiger Brands’ share price came close to a two-year high on Wednesday, following an upbeat annual general meeting address, during which new chair Geraldine Fraser-Moleketi expressed optimism about the group’s prospects as it enters its second century.

The share price strength and Fraser-Moleketi’s optimism was underpinned by a solid trading update, revealing volume growth of 2.6% in the three months ended 31 December.

Both the share price and the chair’s optimism seem undented by the sharp deterioration in trading in January (although the share price fell yesterday).

New lockdown restrictions hit sales and reduced the overall growth in group revenue for the four months to 31 January, to 9.4%, driven mainly by price inflation.

Fraser-Moleketi described employees’ response to the Covid-19 crisis as “phenomenal” and said it helped to ensure South Africans had a secure supply of food and groceries despite lockdown restrictions.

The trading statement stated while it was not immune to the tragic consequences of Covid-19, its robust health and safety protocols appear to have had a positive impact.

“These [protocols] include the frequent screening of employees as well as the use of antigen testing across our sites.

“Although there were no major disruptions to business continuity, some businesses were impacted by inbound supply disruptions.”

Costs relating to Covid-19 preventative measures amounted to approximately R26 million for the four months to 31 January. And it seems the challenge is far from over.

“As a precautionary measure, contingency plans have been put in place to mitigate the potential disruption of our internal and external supply chains in the event of an anticipated third wave,” said the company.

During the four months, volume growth had been achieved across many parts of the business “with particularly strong performance in maize, oatbased breakfast offerings, rice, snacks and treats, and beverages, as well as home care, personal care and baby”.

“Groceries’ volumes were affected by increased competitor activity, inbound supply chain disruptions and poor seasonal demand.”

In her first chair’s address, Fraser-Moleketi referred to the group’s previous “mis-steps as an organisation” but made no specific mention of any of them.

The biggest was undoubtedly the listeriosis crisis in financial year 2018.