Tiger Brands Weathers Listeriosis Storm with Improved Financial Performance

South Africa's largest food producer, Tiger Brands, demonstrates corporate tenacity by reporting a robust financial performance for the year ending September 2024, all while the shadow of the nation’s largest listeriosis outbreak looms large. With a new CEO at the helm, Tjaart Kruger, the company has shown significant improvement, particularly in the second half of the financial year. This strategic recovery follows a tumultuous period marked by the 2017/18 listeriosis crisis tied to the company's processed meat products.

Tiger Brands has managed to slightly outperform last year's top-line results despite a competitive and challenging environment, thanks to deliberate pricing correction strategies. The improved gross and naked margins suggest a successful implementation of cost-saving initiatives, leading to a marginal rise in operating income.

Although the Deciduous Fruit business has been hit by global pricing fluctuations and increased competition, the Home and Personal Care division still posted credible results, discounting the effects of asset disposals. Through focused efforts across its operations, Tiger Brands has managed to cut its net working capital balances, enhance cash conversion, and reduce net debt, entering a net cash position.

As the financial turnaround solidifies, shareholders are advised to anticipate modifications in earnings due to profits from the sale of non-core brands. The detailed financial results are set for release on the Securities Exchange News Service (SENS) around December 4, 2024.

The legal proceedings of the listeriosis class-action lawsuit, however, are far from over. Despite the 218 lives claimed by the outbreak and linkage to Tiger Brands' Enterprise Foods operation in Polokwane, a final court date for determining liability has yet to be scheduled. The Gauteng High Court and the Supreme Court of Appeal (SCA) are deeply involved, with the SCA's recent ruling in Tiger Brands' favor facilitating access to critical information from the NICD and others.

Since the SCA's decisions were passed down, Tiger Brands and the plaintiffs have engaged in extensive pre-trial preparations. A collaborative request in January 2023 to the NICD for outbreak records reflects a mutual effort to accelerate the resolution of the class action. Now, with the FASTQ files in hand, the company's experts probe deep into the investigation data to advance the determination of liability.

Tiger Brands’ legal team remains proactive, seeking agreements that could provide relief to individuals with urgent medical needs stemming from the outbreak, independent of any liability ruling. Negotiations are also underway to expedite the overall resolution of the class action.

Despite the gravity of the litigation, the company showcases resilience, reassured by its comprehensive product liability insurance cover, typical for a conglomerate its size, yet contingent on policy specifics and limitations. Tiger Brands’ fiscal prudence and operational adaptations underscore its commitment to rectify past falterings while steering toward a brighter corporate future.