At time of writing, the three most recent Sens announcements by Tiger Brands all related to the same thing: purchases of shares by a trust associated with Tjaart Kruger, the CEO leading the charge in the current turnaround story.
With more than R4.8m in share purchases involved, it’s worth remembering the old adage in the market: directors may sell shares for many reasons, but they buy for only one. Clearly, Kruger is very happy to buy into the market weakness this year, as Tiger Brands is one of the many victims of negative sentiment on the JSE in 2025.
Having topped out at the 52-week high of R289.76 in December 2024 (still a million miles off the record high of more than R465 in August 2018), the share price has taken a breather and is trading at R268 at the time of writing. There have been attempts by the chart to consolidate this year and stem the bleeding, unlike some of the other charts on the JSE that have been one-way traffic with no sign yet of improvement.
Notably, the 52-week low of R188.93 is a long way down from here. The stock has had a huge trading range over the past year, which is a direct result of the timing of local elections and the fact that we came into 2024 with extremely painful load-shedding. Share prices love staying within ranges, so a broad range is an indication of possible volatility, and thus risk.
As for the fundamental story driving this chart, Tiger Brands is on an upward trajectory these days. Kruger took the reins at the end of 2023 and then had his initial contract extended to December 31 2028, so investors have reasonable certainty over the leadership of the group and the medium-term strategy. This does great things for the bull case.
Tiger Brands is a strong candidate for a turnaround because of how large and unfocused it had become. Within the broad portfolio of brands, there are clear winners where Tiger Brands has the strongest product in the market. There are other categories where there isn’t an obvious edge for Tiger Brands.
Being an “also ran” in the fast-moving consumer goods (FMCG) market, it is unlikely to achieve decent shareholder returns unless the broader consumer picture is so favourable that everyone is making money. Even then, you would rather be the best of the pack. The other point, of course, is that nobody is assuming that we see such conditions in South Africa any time soon, if ever.
When you have a mandate to make whatever changes are needed to find success, you have the political capital internally to make the tough calls and either sell or shut down the parts of the business that aren’t working. This is why there have been disposals of noncore businesses, with the Baby Wellbeing division as the most recent example in a deal that closed in November 2024.
Continuous improvement initiatives across the business are a direct nod to how hope isn’t a strategy in the South African market
By the time you read this, Tiger may also have closed the disposal of its equity interest in Empresas Carozzi in Chile. The decision to sell that stake speaks directly to the level of focus at Tiger Brands, though this obviously further increases regional concentration risks. Aside from the disposals, Kruger also made significant changes to the organisational structure and dispatched teams back to the factories and operations rather than having a bloated head office.
As for the financial trajectory, it’s going to be a grind for the company. This is exactly why focus is so important. Football may be a game of inches, but the local FMCG sector is a game of millimetres. Actor Al Pacino’s famous speech in the movie Any Given Sunday is probably the kind of motivation required to succeed in this space, as Tiger Brands could manage revenue growth of only 3% for the four months to January 31 2025. It’s important to note that this was a period of low price inflation, with volumes in the green as a result of more palatable prices for consumers. Still, 3% growth makes it very difficult for a company operating in the South African environment, where increases on costs such as labour, energy and services are typically much higher.
This is why the most impressive part of the recent update is that gross margin improved despite the lack of price inflation. This was achieved through efficiency, which is exactly what you want to see in a turnaround. The “self-help” continuous improvement initiatives across the business are a direct nod to how hope isn’t a strategy in the South African market. Sitting back and waiting for things to get better doesn’t work.
After headline earnings growth of 11% in the interim period despite revenue dipping by 1%, it’s safe to assume that the second half of the year has shown ongoing earnings growth. This makes Tiger Brands a strong candidate for a watch list based on the share price needing to show signs of consolidation, the important date being the release of results on May 28.
The Finance Ghost
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