Geraldine Fraser-Moleketi
Chairman
Tiger Brands has shown robust recovery under particularly tough market conditions, with share price appreciation over the past year suggesting investor confidence in our turnaround strategy. This underscores the need for continued strong focus on driving cost leadership, focusing on affordability as a growth platform, and significantly strengthening our presence in the general trade segment.
This year’s performance is a testament to the strides made in implementing our turnaround strategy.
Following the appointment of Tjaart Kruger as CEO in November 2023, and the subsequent new appointments to the leadership team in February 2024, it has been pleasing to see the progress that has been made in developing and delivering the company’s turnaround strategy and embedding a new operating model. Under this more streamlined federated operating model, the company now has six business units with five empowered managing directors reporting directly to the CEO. We have simplified and clarified the roles and interdependencies between the business units and the various enabling functions – marketing and strategy, corporate affairs, manufacturing, human resources and legal – which has improved speed of execution, strengthened accountability at the right level, and delivered valuable cost savings.
As a board, we are excited to have approved Tiger Brands’ recently revised strategy, which is the foundation of the company’s turnaround. The strategy comprises five strategic focus areas aimed at repositioning the company by ensuring cost leadership, reshaping our portfolio, rejuvenating our brands, executing three specific growth platforms, and delivering a superior channel presence. Through this strategy, the company seeks to achieve the following six strategic ambitions:
Across each business units, the new leadership teams have been incredibly active in driving the group’s strategic priorities and working towards achieving these strategic ambitions, with early results of the long-term turnaround strategy already evidenced across most of our operations.
Under particularly tough market conditions, Tiger Brands has shown robust recovery, with its market capitalisation up at R42,7 billion and its share price rising over 30%, suggesting strong investor confidence in our rejuvenation activities. Group operating income for the year was up 1%, while headline earnings per share (HEPS) from total operations increased 4%, year-on-year. The company declared a final dividend of 684 cents per share, bringing the total dividend for the year to 1 034 cents per share.
Following a review of the group’s performance, in August the board agreed to extend Tjaart’s tenure as CEO for a further three years, through to the end of 2028. This decision is premised on the positive early progress made on the group’s turnaround ambitions, as well as the progress made in embedding the new operating model and embedding an agile, consumer-centric culture that is focused on execution. The decision to extend his tenure will ensure leadership certainty through to 2028 and provide the necessary runway for the group’s succession plans.
As chairman, I am fortunate to have a highly engaged board with a diverse set of business leadership skills, perspectives and deep FMCG industry knowledge, suited to ensuring strong accountability of the executive team. We currently have 36% women representation on the board and are working towards our target of 50%. There have been several changes this year to the board. At an executive level, as announced in last year’s report, Noel Doyle and Deepa Sita both stepped down as executive directors with effect from 31 October and 31 December 2023 respectively. Replacing them, Tjaart Kruger was appointed executive director and CEO from 1 November 2023, and Thushen Govender was appointed as CFO in January 2024. Among the non-executive directors, Cora Fernandez resigned with effect from 10 October 2023, and Gail Klintworth stepped down with effect from 31 May 2024. The board extends its gratitude to Cora and Gail for their service and commitment, and we wish them both well in their future endeavours.
Looking to the immediate future, it is evident that delivering on our turnaround strategy will require significant further dedication and effort given the volatile macro-economic environment, both globally and locally.
Globally, we are seeing greater economic fragmentation and policy uncertainty, with the growing trend towards increasing isolationism and protectionism gaining renewed emphasis. There are concerns that the new US administration will lead to further economic uncertainty, with the anticipated introduction of tariffs, and fuel inflation could potentially dampen foreign investment in emerging markets.
At the same time, the ongoing conflicts in Ukraine and the Middle East and rising trade barriers between the US, China and the EU are impacting global trade routes and contributing to heightened price volatility in food and energy prices. This volatility is exacerbated by the increasing incidence and intensity of climate-related events, which had a material impact this year on the pricing and availability of some of Tiger Brands' key inputs, such as cocoa beans, small white beans and tomatoes.
In South Africa, the smooth transition to a Government of National Unity (GNU) was well received by global markets, reflecting confidence that the new coalition government will result in positive economic policy measures, help to combat corruption and stimulate greater private sector investment in addressing some of the country’s significant infrastructure challenges. This positive sentiment has been further boosted by a reduction in interest rates and a sustained period without loadshedding. Collectively, this has contributed to an improved economic outlook for the year ahead, with some economists anticipating GDP to grow to around 1,2% and inflation to ease to less than 4,5%.
Despite this improved outlook, we should not underestimate the extent of the country’s-socio economic challenges – including rail, road and port infrastructure, high unemployment, consumer debt levels and restrained wage growth – all of which will continue to place significant pressure on consumers. This context underscores the need for a continued strong focus on driving cost leadership, focusing on affordability as a growth platform and significantly strengthening our presence in the general trade segment.
The 2018 listeriosis outbreak affected many South Africans. We are saddened by the impact which listeriosis had and continues to have on the lives of the victims and those who have lost loved ones from the outbreak. I would like to reiterate our commitment to working diligently to bring the listeriosis class action to a close as quickly as possible.
I wish to thank my colleagues on the board for their valued support and advice during another challenging but rewarding year. On behalf of the board, I would like to thank Tjaart and his team for their vision and leadership in developing and driving the new turnaround strategy, and all Tiger Brands’ employees for their dedication in contributing to the effective execution of this strategy. As the board, we are confident that the company is back on the path to building long-term shareholder value.
Geraldine Fraser-Moleketi
Chairman
December 2024