South Africa’s largest food producer riding high

Tiger Brands surged to a seven-year high after South Africa’s biggest listed food producer lifted its interim dividend and said it would also pay a special dividend after profit climbed 34%. 

The maker of Albany bread and Jungle Oats plans an interim dividend of 4.14 rand a share for the six months through March and a special payout of R1.8 billion, or R12.16 a share, it said in a statement Wednesday.

Tiger Brands has also bought back R1.2 billion of shares since late February. 

The stock surged as much as 6.2% to the highest since May 2018 in Johannesburg, making it the best performer on the FTSE/JSE Africa Industrial 25 Index. 

The company’s products are household staples for South African consumers, who are navigating sluggish economic growth and high unemployment even as they benefit from recent interest-rate cuts.

The economy expanded 0.6% last year, the worst performance since the Covid-19 pandemic. A Bloomberg survey foresees the economy growing 1.7% this year. 

Tiger Brands has contended with several problems over the past decade, including the recall of 20 million cans of food and of baby-powder products that were suspected to be tainted by asbestos.

That was after an outbreak of listeriosis in 2018 hit the company, killing more than 200 people, infecting more than 1,000 others and leading to a class-action lawsuit.

After paying out a special dividend, “there’s still room to go in terms of returning further cash to shareholders as we turn around the business,” Chief Financial Officer Thushen Govender said in an interview.  

So-called headline earnings from continuing operations climbed 34% to R10.21. 

The company is returning funds to shareholders even as it contends with the protracted listeriosis class action. Earlier this month, it made settlement offers to some classes of claimants in the case that’s still at the first stage during which a court will determine liability.

Govender said that Tiger Brands has sufficient insurance coverage in place for the claims. 

The consumer goods producer is selling its Langeberg and Ashton Foods deciduous-fruits business, and on Tuesday, it said it plans to dispose of corn- and wheat-milling operations in Randfontein, west of Johannesburg.