World's Worst Listeriosis Outbreak Hits Tiger Brands Earnings
(Bloomberg) -- Tiger Brands Ltd. reported the first decline in six-month revenue since 2010 after the world’s worst outbreak of listeriosis in South Africa was linked to its processed meat products.
Africa’s largest packaged-food maker said it had a “slow start to the year under difficult trading conditions,” as sales dropped 4 percent from a year earlier to 15.7 billion ($1.3 billion) and revenue from value-added meats slumped 9 percent. The outlook for the rest of the year “remains challenging,” the Johannesburg-based company said in a statement Thursday. Its shares fell the most in more than two months.
Health Minister Aaron Motsoaledi in March said that traces of the listeria strain blamed for the South African outbreak were identified at Tiger Brands’s Enterprise factory in the northeastern city of Polokwane. The company has since closed its Enterprise plants and recalled thousands of tons of chilled, ready-to-eat processed meat products. The plants will likely stay shut for much of the rest of the year, it said.
Tiger Brands intends to join a national response to the outbreak involving the government. “The engagements are going forward and very helpful -- we expect an invitation to join them and have a more collaborative, open and frank discussion,” Chief Executive Officer Lawrence MacDougall said on a conference call.
Victims of the outbreak, which the United Nations described as the largest on record, have filed two class-action suits and there are plans to consolidate these into one, MacDougall said.
The product recall has cost 365 million rand, net of initial insurance claims, Tiger Brands said. “Recall from our own manufacturing facilities, from customers and consumers is all now complete,” MacDougall said. “Over four thousand tons has been recalled and is now being incinerated in a safe way.”
First-half headline earnings per share, which strips out one-time items, from total operations fell 16 percent. The interim dividend was unchanged at 378 cents a share. Tiger Brands fell as much as 4 percent in Johannesburg trading, the most intraday since March 19, and was 3.3 percent lower as of 11:01 a.m. The benchmark South African stock index was 0.3 percent higher.
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