CAPE TOWN: Haco Tiger Brands, the Kenyan unit of South African group Tiger Brands, made more than half of its revenues last year from exports to East African countries-— indicating increased importance of the cross-border markets to its growth strategy. Tiger Brands, which has a 51 per cent stake in the Kenyan business, said exports to East African neighbours accounted for 53 per cent of Haco’s turnover, up from 44 per cent during a similar period last year. Exports to Uganda, Rwanda, Burundi, Tanzania and Congo were driven by “successful and targeted marketing campaigns,” said the Johannesburg-listed Tiger Brands in its 2016 annual report. “Exports have been doing well. I think it is due to growing demand from the regional middle-class,” said Haco chairman Chris Kirubi, who has a 49 per cent stake in the Kenyan unit.
Tiger Brands’ East African business includes Haco in Kenya and a loss-making Ethiopian subsidiary. The South African group does not provide a national breakdown of its businesses outside South Africa. As a whole, the East African unit had a turnover of Sh7.2 billion (959.8 million rand), a 26 per cent improvement from last year. Mr Kirubi said Haco is increasingly looking in the region for growth. However, Kenya remains the company’s main turf. Haco has been on the recovery road from a 2015 scandal in which top managers altered financial statements and engaged in pre-invoicing, inflating operating profit by Sh879 million and causing the Tiger Brand group’s operating income to decline five per cent to Sh13 billion. Tiger Brands now says that Haco business has stabilised. During the period ended September 2016, Tiger Brands reported a seven per cent increase in group turnover to Sh249.8 billion (33.3 billion rand) while after-tax profit rose six per cent to Sh24.7 billion (3.3 billion rand).
South Africa continues to account for more than 80 per cent of Tiger Brands’ turnover. With volatility in the South African market, the firm is looking to expand its operations in Africa. “We recognise that additional opportunities for sustainable growth lie outside our core markets in South Africa,” said Tiger Brands in the annual report. With the continent the business is buffeted by other challenges. Currency fluctuations have harmed the company’s business in Nigeria while political instability in Central and East Africa is a continuing threat. There is also the risk of currency shortages in Ethiopia and foreign exchange volatility in Uganda and Rwanda. Tiger Brands is divesting itself of its Ethiopian business after the company’s operations were severely affected by drought as well as political unrest in the country.
