Strong Cash Management and …

This article first appeared on GuruFocus.

Release Date: November 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Tiger Brands Ltd (STU:UG5A) reported a strong cash conversion rate of 90%, indicating efficient cash management.

• The company achieved significant volume growth of 3.5%, which increases to 5.8% when excluding discontinued SKUs.

• Tiger Brands Ltd (STU:UG5A) returned 10 billion rand to shareholders through special dividends and share buybacks, showcasing strong capital allocation.

• The company has made substantial progress in sustainability commitments, including securing supply chains and reducing emissions.

• Tiger Brands Ltd (STU:UG5A) has successfully optimized its portfolio, completing several disposals and rationalizations ahead of schedule.

• The company faces challenges in maintaining competitive pricing in the carbonated soft drink market, impacting beverage sales.

• There are ongoing risks related to supply chain disruptions, particularly in securing raw materials like wheat and sunflower oil.

• Tiger Brands Ltd (STU:UG5A) has experienced issues with canned supplies for its pesticide business, affecting sales during peak seasons.

• The personal care segment is under pressure due to competitive pricing, particularly in the skin care category.

• The company acknowledges that its working capital efficiency of 52 days may not be sustainable long-term, indicating potential future adjustments.

Q: How long from commissioning do you expect to realize the full benefits of the super bakeries, and what capacity utilization assumptions are you using for that scenario? A: The super bakery’s investment case is based on cost, not volume growth. It replaces existing capacity with more efficient, lower-cost capacity. We won’t close all old bakeries due to volume growth, which may lead to a second super bakery sooner than expected. The benefits include improved cost base and quality due to better technology, although centralized manufacturing complicates distribution. The bakery will deliver to depots, not directly to customers.

Q: Outside of pure economies of scale benefits from the mega bakery, what are some upside opportunities we might be missing? A: Opportunities include innovative ways to reach consumers, such as engaging hawkers with trolleys to sell bread. This approach provides cost-efficient distribution and consumer preference. The focus is on daily improvements and not relying solely on the new bakery for savings. Coastal bakeries face different challenges, such as reaching consumers before competitors and dealing with safety issues for drivers.