Tiger Brands said it is well-prepared for load-shedding with a business continuity plan in place for up to stage 10.
This was revealed in the company’s unaudited group results and dividend declaration for the six months ended 31 March 2023.
The South African packaged goods company increased revenue by 16% from R16.8 billion to R19.4 billion.
Despite the strong revenue growth, its operating profit decreased by 9.2%, and its net profit decreased by 2.1%.
Tiger Brands said its financial performance was impacted by a challenging operating environment due to prolonged periods of load-shedding.
The total cost of load-shedding amounted to R76 million for the period relative to R12 million in the corresponding period last year.
As a result of the higher cost of keeping the lights on, gross margins declined to 27.0% from 29.2% last year.
The outlook remains bleak. “Operating costs are expected to rise significantly as a consequence of higher levels of load-shedding during the winter season,” Tiger Brands said.
The good news is that the company is making good progress in manufacturing efficiencies and ensuring quality standards despite load-shedding.
The company said it had been well-prepared for load-shedding so far and has a business continuity plan in place up to stage 10.
With stage 10 load-shedding, the power will be off for more than half the day, which requires extensive power backup systems.
Although Tiger Brands did not provide details about what its plan entails, one can assume it includes diesel generators, solar installations, and battery backup.