Tiger Brands’ chief financial officer, Thushen Govender. (Photo: Tiger Brands) Let’s get the lingering listeriosis issue out of the way. “We remain committed to close this and settle this case in the appropriate manner. However, without the data, we don’t know the extent of Tiger’s involvement. We don’t know how many people have suffered ... [and to what] ... extent ... and that data is so crucial to take this legally forward in the right direction.”
That was what Tiger Brands’ chief financial officer, Thushen Govender, said in response to Daily Maverick questions around the potential class action lawsuit following the 2018 listeriosis outbreak demons that may be haunting the interim financial results balance sheet. Tiger Brands settled, sold off the Enterprise business, and the matter is in the realm of the insurer (QBE).
“And we [have] certainly given it our best, working with the claimants’ attorney, working with our lead insurer’s attorneys ... to bring this to a close sooner rather than later. But across all of these instances, we’ve assessed the potential liability, and we certainly believe that we [are] adequately insured for this.”
The only impairment on the current balance sheet is from the Beacon sale. However, management expects the R92-million loss on property and equipment to be countered by profits from the slabs and Easter egg business, projecting a net positive result by year-end. Tiger Brands is keeping the TV Bar, Nosh, Wonder Bar, Black Cat chocolate, Jelly Tots chocolate and Jungle Energy Bar, though.
A sweet deal
We asked the obvious question: how valuable is the Beacon chocolate business after being stripped of its high-profit snacks (which also benefit from the cereals supply chain)?
Govender acknowledged that while Beacon is a great brand with market-leading Easter eggs and the number three market share in chocolate slabs, the portfolio simply “does not sit well in the hands of Tiger”. He explained that for Tiger Brands, which has a diverse portfolio, the Beacon business was a “distraction relative to the return and the scale it brought to Tiger”.
However, he defended the sale as a positive move for the brand itself:
“We’ve found the right buyer [undisclosed], who we believe is appropriate for that particular product line and that brand will invest behind that business and grow it from strength to strength. In the hands of a different buyer, it brings them significant scale, which allows them to invest time, attention and funds behind it.”
When asked if the transfer was the best deal for the workers, Govender clarified that the transaction is not a sale of a going concern. Tiger Brands is only selling the brand and the equipment.
However, he confirmed that the undisclosed purchaser will not maintain manufacturing operations in Durban. Instead, the buyer plans to relocate the equipment closer to the product range’s largest consumer market (read: Gauteng).
For context, in FY25 the entire Snacks, Treats and Beverages (STB) segment brought in R6-billion in revenue (an increase of 3.1%) and generated an operating profit of R820-million.
In the H1 26 interim results, the STB division generated R3.266-billion in revenue (often referred to as R3.3-billion), which represents a 1.2% increase from the prior period and a 16.1% increase in operating income year-on-year. This division contributed 18% of Tiger Brands’ total group revenue for the half-year.
But, in these results, the Beacon chocolate business is classified on the balance sheet under “assets held for sale” and grouped with several other discontinued operations and assets (including Chococam, the deciduous fruit business, maize milling and the old corporate head office), which collectively had a combined net carrying value of R1.569-billion.
The unfortunate business of efficiencies
Speaking of the FY25 results, those came with their own challenges. Last year, Tiger Brands had to restate its financial results due to historical accounting errors, misclassifications and a JSE-mandated review that required the consolidation of several B-BBEE empowerment trusts under IFRS 10 (the international accounting standard).
Asked how the company is fixing its auditing controls and data integrity to prevent another recurrence, Govender pointed to automation as the primary solution:
“We found a significant amount of opportunities to automate. For example, our shared services centre, which manages debtors, creditors, suppliers, customers. We found 151 manual instances of tasks that we could automate and by next year some time we would have completed that automation that gives you speed of turnaround as well as accuracy.”
He further elaborated on how this automation specifically improves financial reporting and operational forecasting:
“What we’ve also done is invested in an automated system that’s currently being investigated with regards to month-end close closing off the journals, etc … and automatically generating monthly reports. We currently do this within two weeks of close. We want to bring that down to less than a week, that time to turn around.”
“So across this value chain we’ve identified opportunities even with regards to our production demand management forecasting. We’ve introduced SAP IBP (Integrated Business Planning), which is a forecasting tool which has taken our forecasting from Excel into an automated system with sophisticated algorithms. There’s been great progress in that regard, and I’m pleased to say there’s a lot more to come.”
Govender noted that the company is actively reskilling administrative and finance staff ahead of expected displacements, though he admitted that not all roles can be saved. Daily Maverick pledged to follow up when the layoffs begin. For now, the company remains optimistic about its current results. DM