Half-year earnings for Africa’s biggest packaged-food producer, Tiger Brands dropped by 16% following the outbreak of the ‘world’s worst’ listeriosis outbreak reported having cost it US$29 million.
The deadly listeriosis outbreak which has killed 200 people since early 2017 was linked to one of its meat processing facilities leading to a recall of its cold meat products including polony meat and eventual suspension of production at four of its South African plants.
“Recall from our own manufacturing facilities, from customers and consumers is all now complete,” said Chief Executive Officer Lawrence MacDougall
“Over four thousand tons has been recalled and is now being incinerated in a safe way.”
The company said it had a slow start of the year due to the difficult trading environment as sales dropped 4% to US$1.3 billion compared to a year earlier.
Revenue from value-added meat products decreased by 9% while its shares fell the most in more than two months, said the company’s May 24 statement.
First-half headline earnings per share from total operations fell 16% and the interim dividend was unchanged at 378 cents a share.
As Tiger Brands fell as much as 4% in Johannesburg trading, the company indicated that outlook for the rest of the year “remains challenging”.
“The outlook for the balance of the year remains challenging, with intense competitor activity in the domestic market and no meaningful recovery expected in international markets,” Tiger Brands said in its statement.
While pretax profit from continuing operations fell 18% to US$152.86 million in the six months to end-March, the company said group revenue from continuing operations declined 4% to US$1.26 billion, hit by price deflation and falling volumes.
After recording modest performance in its home, personal care division and the deciduous fruit operation, the group noted it was expecting stiff competition in the local market for the rest of the financial year, and no meaningful recovery in its international markets.
Although it completed remedial work and awaited guidance from the Department of Health, its processed meat facilities would remain shut for most of the second half.
Tiger Brands, which also is facing combined class action lawsuit filed in March by Richard Spoor, a human rights advocate, on behalf of families affected by the listeria outbreak said it did not yet have details on the total amount of the claim.