South African food producer Tiger Brands is looking to cut “significant” numbers of jobs and has scrapped its interim dividend due to supply disruptions and margin pressures linked to the coronavirus, it said on Monday.
The owner of popular South African food brands Jungle Oats and Tastic rice said its first-half headline earnings per share fell 35% for the six months to March.
Its profit will take a roughly R500 million ($28 million) hit in the second half from currency weakness, global supply chain disruptions and additional costs incurred during a lockdown to curb the spread of the virus, it said.
The maker of Jungle Oats and Tastic rice says first-half headline earnings per share fell 35% to 501 cents. Tiger Brands CEO, Noel Doyle:
The company has started looking at cost-cutting measures, including possibly “significant” job cuts, Chief Executive Noel Doyle said in a media call.
“We have to look at a couple of categories where we have been incurring significant losses,” he said.
Tiger Brands employs more than 11,200 people in South Africa, excluding seasonal staff.
The group said it has decided not to declare an interim dividend, and could re-consider an annual dividend depending on its trading performance.
The food producer is also looking to exit its Deciduous Fruit business, which covers canned fruit, and will restructure some of its low-performing personal care brands, Doyle told analysts during a presentation.
He said the firm expects annual cost savings of 250 million rand from its current reorganisation plans.
Its first-half pre-tax profit from continuing operations fell 65% to 673 million rand, the company said.
Group revenue rose 2% to 15.7 billion rand and group operating income dropped 29%, with operating profit margins declining to 7%, it said.
“The group’s overall performance reflects the difficult trading environment and the challenges faced, particularly within grains, groceries, value-added meat products and exports,” Tiger Brands said in a statement.