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Tiger sees SA consumers under pressure as costs rise
Tiger sees SA consumers under pressure as costs rise

Tiger sees SA consumers under pressure as costs rise

ECONOMIC NEWS

Fin 24 - Jul 19th 2016, 12:42

Johannesburg - Tiger Brands said the risk of higher inflation will place pressure on South African consumers as the nation’s biggest food producer is raising prices to try to offset cost pressures following record maize prices. 

Headline earnings per share from continuing operations, which exclude one-time items, were R9.78 in the six months ended March 31 from T9.75 a year earlier, the Johannesburg-based company said in a statement on Tuesday. Tiger sold its unprofitable Nigerian business to Dangote Industries with effect from February 25, treating this as a discontinued operation. The interim dividend rose 7% to R3.63 per share.

The weak rand and the worst drought in more than a century have boosted South African food costs and threaten to keep inflation outside the South African Reserve Bank’s (Sarb's) 3% to 6% target range for an extended period. There are indications that the pass-through from the exchange rate to inflation is increasing and food-price growth is forecast to climb to about 12% in the third quarter of this year, the Sarb said last week.

“The outlook for the balance of the year remains challenging, with downside risk to the macroeconomic environment, both in South Africa and in a number of African markets, likely to add further pressure on consumers,” Tiger said.

“The key challenge will be to maintain volume momentum notwithstanding price increases that are currently being taken to partially offset the cost pressures.”

Lawrence Mac Dougall, who previously headed Mondelez International’s eastern Europe, Middle East and Africa business, was appointed chief executive officer in March to replace Peter Matlare, who resigned last year after overseeing a R954m writedown related to the company’s Dangote Flour Mills unit in Nigeria that was bought for about $152m in 2012.

The stock fell 0.2% to R337.90 by the close in Johannesburg on Monday, giving the company a market value of R64.9bn. The stock was trading at R333.53, 1.29% down, shortly after 10:00 on TuesdayFrom Fin24 

Read more about: tiger brands | retail | food | economy

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