Tiger brands get mauled - and there may be significant job cuts
South African food producer Tiger Brands is looking at “significant” job cuts and won’t pay an interim dividend as its business is hit by supply disruptions and margin pressures due to the impact of the coronavirus.
The owner of Jungle Oats and Tastic rice said first-half headline earnings fell 35% and it expects coronavirus-related costs of about R500 million ($28 million) to hit profit in the second half due to rand weakness, global supply chain disruptions and additional costs incurred during a lockdown in South Africa to curb the spread of the virus.
As a result the company has started looking at cost-cutting measures, including possibly “significant” job cuts, Chief executive Noel Doyle said.
One cannot hide behind Covid-19 for the results for the first six months, they would reflect our premium pricing in a market where the consumer was already particularly strained - as well as one or two other issues like our legal challenges in Nigeria etc...Noel Doyle, Chief Executive Officer - Tiger Brands
We just have to execute against a programme that will make us more cost-competitive and allow us to grow at least at a level that the market will guide.Noel Doyle, Chief Executive Officer - Tiger Brands
There is a feature in those numbers if you look at some of the challenges that we've highlighted in respect of Covid-19; there were certain price increases that we would have implemented just after the pricing regulations were issued in the middle of March that would have had an impact on our go-forward position.Noel Doyle, Chief Executive Officer - Tiger Brands
I think we need to realise that big as we are we are not a monolithic entity in a sense that all of our categories have different drivers and we're going to have to structure our business to be more nimble and more quick-acting...Noel Doyle, Chief Executive Officer - Tiger Brands
Doyle said it was difficult to give an estimate on numbers, when asked how many jobs are anticipated to be slashed.
I think it's likely to be a significant number, we're working through it methodically business by business - it's really quite difficult when we have not been through the consultation process internally to put an exact number on it...but certainly in my mind it could well be in the region of ten per cent.Noel Doyle, Chief Executive Officer - Tiger Brands
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