Tiger Brands has revealed stable growth in its end of year results, although the year was challenging as the South African economy struggles, the company said.
Headline earnings per share (HEPS) – the main measure of growth used in South Africa – were up by 7.3 percent at year end September 2012, the company revealed; rising to 1684 cents ($ 0.0188) as compared to the 2011 figure of 1575 cents ($0.0175).
Turnover also grew substantially, reaching 22.67 billion Rand ($ 2.53 billion) – displaying an 11 per cent growth on 2011 results, when turnover levelled out at 20.43 billion rand ($ 2.28 billion).
Profits for the year rose by 6.6 percent, with the company reporting 2.74 billion rand ($305.7 million) of profit for 2012, while in 2011 only 2.57 billion ($ 289.7 million) of profits were achieved.
The leading South African food retailer did admit that the concluded financial year had been difficult due to pressures to the economy, including reduced consumer spending power, noting: “The 2012 financial year was challenging, reflecting in broad measure the state of the South African economy.”
The food supplier added: “Intense market competition and muted domestic growth were compounded by significantly increased volatility in the pricing of soft commodities, which negatively affected the food sector,” going on to explain: “Consumer spending, which had previously been the main driver of domestic demand, slowed in the face of weaker business confidence and rising cost pressures. With above inflationary cost increases affecting real disposable incomes, consumers continued to make tough choices in their spending decisions, cutting back on consumption levels where necessary and widening their brand repertoire to include economy alternatives.”
South Africa’s economy has been struggling over the past period, as a reduction in investor interest has become apparent – particularly reflected in the ever-decreasing number of foreign investor’s fuelling the country’s economy. At the end of October an investment trends report by the UN showed foreign direct investments in South Africa dropped 43.6 percent in January-June of 2012 compounding a steady decline in investment felt over the past three years.
More recently, the country has been plagued with a string of labour force strikes- as workers in multiple industry segments have stopped work in demands for higher wages. The strikes brought a number of sectors in to significant distress – with truckers refusing to distribute goods, prompting fears of imminent food shortages as fresh food spoiled due to lack of distribution. The strikes also caused a real problem for fuel suppliers across the country – numerous producers unable to carry out fuel supply contracts nation-wide; while the miners’ strikes have proven deadly and also caused substantial financial consequences for the country’s economy.