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South Africa's Tiger Brands flags profit hit from civil unrest and product recall

10/26/2021 | 05:42am EDT
Boxes of Jungle Oats, one of South Africa's Tiger Brands original products, are seen on a shelf  at an outlet of retailer Woolworths in Sandton

JOHANNESBURG (Reuters) - South Africa's largest food producer Tiger Brands said on Tuesday its annual earnings could fall as much as 15%, impacted by one-off costs related to the recall of canned vegetables and civil unrest in July.

The owner of popular brands such as Jungle Oats, Albany bread and Tastic rice said headline earnings per share from continuing operations for the year ended Sept.30 is expected to be between 5% and 15% lower than 1,196 cents reported in 2020.

By 0908 GMT, shares in Tiger Brands were down 2.98% at 183.10 rand, on track for their worst session since July 26.

The unrest in July started as sporadic protests over the jailing of former president Jacob Zuma, but it quickly escalated into arson and looting, in which hundreds of businesses were damaged, as anger over poverty and inequality boiled over.

Tiger Brands also recalled about 20 million canned vegetable products from the KOO and Hugo's range in July as the cans were suspected to have defective seam welds that posed a risk of leaks.

The write-off of assets plus stock losses related to the civil unrest amounted to approximately 100 million rand ($6.75 million), pre-tax, whilst the adverse financial impact of the recall totalled 647 million rand before tax, the food manufacturer said.

The after-tax impact of both is estimated to be in the region of 318 cents per share, the group added.

"These once-off costs more than offset the group's improved underlying performance, despite a particularly challenging second half for the milling and baking operations as well as exports," Tiger Brands said.

($1 = 14.8218 rand)

(Reporting by Nqobile Dludla; Editing by Simon Cameron-Moore)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
OATS FUTURES (O) - CBR (FLOOR)/C1 2.07% 689.5 End-of-day quote.0.95%
TIGER BRANDS LIMITED -1.43% 138.99 End-of-day quote.-23.21%
ZR (ZR) - CBE (ELECTRONIC)/C1 1.56% 17.25 End-of-day quote.17.33%
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