Latest news with #ThushenGovender
IOL News
4 days ago
- Business
- IOL News
Crunch time for Beacon chocolate range as Tiger Brands hits uncertain times
Beacon chocolates face an uncertain future as Tiger Brands considers selling the brand. Image: YouTube For countless South Africans, the sight of a Beacon chocolate bar evokes feelings of nostalgia and comfort. Whether it's a casual slab snatched at the checkout or special treats like Nosh or the beloved TV Bar, these local delights have become an integral part of sharing sweet moments across generations. Yet, this emblem of South African confectionery may soon vanish from our shelves, as Tiger Brands—a towering figure in the country's food production—has revealed plans to sell its Beacon chocolate range. Founded nearly a century ago, the Beacon brand encompasses an array of popular items, from the iconic chocolate-and-marshmallow Easter eggs to the creamy slopes of Ebony and Ivory chocolates. However, current realities paint a challenging picture. CFO Thushen Govender recently shared with News24 that while no definitive decision has been made, the company is actively pursuing options to divest its chocolate category. "We will continue delivering on the strategic turnaround of the business until such time as an appropriate exit mechanism has been identified," Govender stated, leaving the future of these beloved treats hanging in the balance. CEO Tjaart Kruger further emphasised the difficulties facing the chocolate division, admitting that technological advancements had not kept pace, with the chocolate-making equipment remaining unchanged for over three decades. "The investment required to modernise the facility is now too high to justify," he explained. However, Kruger remains hopeful about the brand's potential, reiterating that 'in the hands of the right person, the Beacon chocolate brand can be a good business.' The competitive landscape presents another hurdle, as Kruger noted the challenges of competing with industry giants. "We price against Cadbury like R4 or R5 a slab cheaper and still don't get the volumes," he remarked. This disparity in scale and marketing prowess has left Beacon struggling to maintain its footprint in a market dominated by formidable competitors. While the future of Beacon chocolates remains uncertain, Tiger Brands has reassured its consumers that other cherished favourites in its sweets portfolio—such as Jelly Tots, Maynards Wine Gums, and Liquorice All Sorts—will remain unaffected by these changes. They have also confirmed that production of Beacon chocolates will continue until a suitable buyer or alternative strategy is established. The prospect of losing such a beloved brand is undoubtedly a troubling thought for loyal fans and casual consumers alike. For many, these chocolates represent more than just a snack; they are a nostalgic reminder of simpler times, family gatherings, and spontaneous treats that could turn an ordinary day into something extraordinary. As we await further announcements from Tiger Brands, our cherished Beacon chocolates might soon transition from a simple indulgence to treasured memories, leaving us all pondering the future of these iconic treats. DAILY NEWS
Yahoo
29-05-2025
- Business
- Yahoo
Tiger Brands Ltd (FRA:UG5A) (Q2 2025) Earnings Call Highlights: Strategic Moves and Financial Gains
Volume Growth: 2.6% growth in core business volumes. Operating Margin: Approaching 10%. Return on Invested Capital (ROIC): Closer to 20% when excluding averaging calculations. Gross Margin: On track to reach 30% and above. Cash Position: Significant cash on the balance sheet due to operational cash generation and disposals. Special Dividend: 1.8 billion rand special dividend declared. Total Dividend: 2.4 billion rand declared, including special and normal dividends. Share Buyback: 1.2 billion rand spent on share repurchases. Continuous Improvement Savings: 200 million rand achieved in the first half. Revenue Growth: Positive revenue growth with food inflation lower than the market. Working Capital Management: Exceptional performance with reduced net working capital days. CapEx Approvals: 1.8 billion rand approved for capital projects. Net Debt Position: Significant improvement, contributing to special dividend. Warning! GuruFocus has detected 8 Warning Signs with FRA:UG5A. Release Date: May 28, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Tiger Brands Ltd (FRA:UG5A) reported a 2.6% growth in core business volumes, marking a turnaround from previous declines. The company has successfully implemented continuous improvement programs, achieving cost savings ahead of targets. Portfolio reshuffling has been effective, with successful sales of non-core operations like Karachi and baby well-being. The company has a strong cash position due to operational cash generation and disposals, enabling special dividends and share buybacks. Operating margin is approaching 10%, and return on invested capital (ROIC) is on track, indicating improved financial health. The consumer market remains under pressure due to economic challenges, impacting affordability and demand. The company faces competitive pressures in the home and personal care segment, with significant challenges in aerosol supply and competitive activity. There are concerns about stranded costs from disposals, although efforts are being made to mitigate these through continuous improvement programs. The grains business, despite recent improvements, has historically underperformed, and the company is exiting the maize and chocolate confectionery markets due to strategic misalignment. The bakery segment faces capacity constraints, and while a new super bakery is planned, it will not be operational until late next year. Q: Can you explain the strategy behind the Mega DCs and how they will impact margins and sales? A: Thushen Govender, CFO: The Mega DCs consolidate six existing warehouses into one, reducing overheads and utilizing better technology for cost reduction. This is not about competing with retailers but enhancing supply chain efficiency. The Mega DCs are not directly linked to general trade distribution, which is managed through bakeries and sub-distributors. Q: What was the rationale behind selling the wheat mill along with the maize operations in Randfontein? A: Tjaart Kruger, CEO: The wheat mill was not supplying our bakeries but was focused on retail flour. Selling the entire facility, including the maize mills, was strategic due to surplus capacity in the industry. This allows us to optimize our wheat milling footprint and reduce conversion costs. Q: Could you elaborate on the capital allocation framework, especially regarding share buybacks, special dividends, and acquisitions? A: Tjaart Kruger, CEO: Our focus has been on fixing the base business. We are open to acquisitions that make strategic sense but will not pursue bolt-ons. Surplus cash will be managed through a combination of lowering dividend cover, special dividends, and share buybacks, depending on the share price valuation. Q: Why is Tiger Brands exiting the maize and chocolate confectionery markets? A: Tjaart Kruger, CEO: The maize industry has become highly fragmented, making it difficult to build a strong brand. We haven't been profitable in maize for years. In chocolate, we lack the competitive edge against larger players, and the category itself is not attractive. Exiting these markets allows us to focus on more profitable areas. Q: How has Tiger Brands' performance in bread been relative to competitors, especially outside top-end grocers? A: Tjaart Kruger, CEO: Our performance has been strong, particularly in Gauteng, where we are nearing capacity. We've resolved issues in KZN and are making progress in Cape Town. Overall, we've seen market share growth in both general trade and top-end retail, despite the competitive bakery industry. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
