Generators see Tiger Brands electricity bill soar to 4 times the norm

One of Africa’s largest listed food makers, Tiger Brands, said on Monday that using generators to mitigate the impact of load shedding on operations is costing the company four times the Eskom tariff. existing.

As such, the JSE-listed company said in a business statement for the year ending September 2022 that it is closely monitoring the availability of diesel as it is now having a significant impact on its operations. This in light of Eskom’s struggles to keep the lights on for at least four to eight hours a day as the country alternates between Stages 3 and 4 of load shedding.

“The impact of load shedding in the current period has been largely offset by the significant investments made previously in power generation capacity,” the group said.

“As a result, there has been minimal disruption to supply, although using generators costs around four times the existing Eskom tariff.”

“In this scenario, future business continuity will depend on the constant supply of diesel. The effect of prolonged blackouts on incoming supply is being closely monitored,” he added.

Inflationary pressures

The group, which owns popular brands such as KOO, Jungle Oats, Ouma biscottes and Beacon, said overall annual basket inflation rose 12 percentage points in the past five months to August, to 15%. During the first six months of the year ending in March, the annual inflation of the basket was 3%.

The increase in basket inflation is the result of realigning prices to account for “extraordinary cost pressures on commodities”, the group said.

“High levels of inflation are expected to persist in our basket into next fiscal year, which will require continued agility and careful price/volume management in the face of a struggling consumer,” Tiger Brands said.


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Earnings expectations

As well as battling electricity and inflation-related cost pressures, the group also suffered a financial setback when it had to recall a range of baby powder products in early September after traces of asbestos were detected in test samples of a batch of talcum powder used as crude. Material.

The incident sent the group’s share price down more than 10% on the day the recall was announced.

Listen: Tiger Brands comments on recall of products containing asbestos in baby powder

The recall of baby powder products is expected to cost the group between R20 million and R25 million, covering the loss of affected stock and logistics costs related to the recall.

Despite this, the group expects its earnings per share (EPS) from continuing operations for the financial year ended September 2022 to increase by up to 55%, or 589 cents more than the 1,070 cents reported the previous year.

Overall earnings per share (Heps) from continuing operations are expected to increase by up to 45% this period, with a potential gain of 507 cents from that previously reported in 2021.

Tiger Brands shares traded up more than 9.30% at midday on Monday, taking the share price to R176.

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