Tiger Brands facility
 
JOHANNESBURG, SOUTH AFRICA — Operating income at Tiger Brands Ltd. in the year ended Sept. 30 totaled R4.6 billion ($335.7 million), up 11% from fiscal 2016, boosted in part by a 2% increase in sales to R31.3 billion.

Tiger Brands CEO
Lawrence Mac Dougall, chief executive officer.

“It is indeed pleasing to announce that Tiger Brands has again been able to deliver a relatively healthy set of results, especially in the context of the political and economic uncertainties that South Africans have endured this year and the impact that this has had on consumer confidence,” said Lawrence Mac Dougall, chief executive officer.

Mac Dougall said the results are underpinned by “improved pricing strategies, momentum from our centralized procurement hub and intensified cost control.”

During a Nov. 27 conference call, Noel Doyle, chief financial officer, said Tiger Brands received a strong performance from its Grains business during the year, with operating income up 18% year over year.

Tiger Brands CFO
Noel Doyle, chief financial officer.

“Very good performance, here, throughout the year if we look at the wheat-to-bread value chain,” Doyle said. “Some pressure, as we saw competitors respond on a price-driven basis in the second six months of the year, but a very pleasing performance out of that business. In maize, here, we did get the procurement position. We made that call reasonably well relative to the market, so whereas this time last year we were talking about a very poor second half performance for maize, we had a much more normalized maize performance for our business for the full year.

“And then our sorghum business also benefiting from deflation, and our maize-based breakfast business had a really good performance.”

Doyle said Tiger Brands also was pleased with the performance of its Other Grains business, with the exception of pasta, which he said had a slow second half.

“Very, very strong performances out of our rice business, and we still haven’t had the full year impact of the new procurement model that's in place and a very good performance from our Jungle breakfast business,” he said.

Since taking over as CEO in May 2016, Mac Dougall has set Tiger Brands on a course focused on reviewing and developing a new five-year corporate strategy and operating model. The company implemented the new operating model on Oct. 1, and is now looking to build distinctive capabilities required to win with consumers, customers and business partners.

“The benefits of a renewed organizational culture, one that is characteristically performance driven and cost-conscious can already be observed across many areas of the business,” he said.

During the conference call, Mac Dougall said profitable volume growth is extremely important for Tiger Brands.

“We’ve seen some behaviors in the market at the moment, where it’s really difficult to understand the pricing volume relationship, and our people are working to turn investments,” he said. “We need to make sure that whatever we invest in … delivers positive returns to the category through increased consumption or increased share, and that’s what we’re going to be focusing our business on. So profitable volume growth and growing our share of each of those segments is really going to be a far higher priority than it was in the second half of 2017.

“And that really plays itself out … through driving fuel for the growth, ensuring that we’re still driving the cost-conscious culture, making sure there’s a relentless focus on driving unwanted costs out of the business. Improving our productivity and supply chain effectiveness, now that we have an integrated supply chain, that’ s far easier to see where the cost opportunities are through that supply chain, and we’ll drive that hard, which should then … give us the incremental margins and also give us the cost savings that we then need to reinvest back in our brands where we said we are under-indexing.”

Tiger Brands also will remain focused on geographic expansion, Mac Dougall explained.

“We are very clear now what the brands are in South Africa that we believe are advantaged, how do we now take those into the geographies we operate north of our territory in a very efficient way, not in the export-based culture but one in a market development culture, where we have resources on the ground that focus on route to market and focus on brand building,” he said.