Tiger Brands Limited (TBS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Tiger Brands' Interim Results Presentation for the 6 months ended March 2023. I'm Nikki Catrakilis-Wagner responsible for Investor Relations at Tiger Brands. We also welcome those who have joined us on the webcast. I would particularly like to welcome you to the Sensorium. It's a brand-new state-of-the-art, multipurpose center dedicated to innovation. It will enhance our research and development facilities, category pilot plants at the manufacturing sites and people capability to future-proof the business. It includes a laboratory, a functional pantry, a test kitchen and a sensory room. For those of you who are in the room, you'll be taken on a tour of the facility following the presentation. Coming back to the presentation, the agenda will follow the same format as we follow every result cycle. We'll begin with opening remarks from CEO, Noel Doyle; Deepa Sita, the CFO, will provide a financial overview and the Chief Growth Officers will cover the operational aspects of their respective portfolios. In terms of operational reviews, you'll be familiar with Yokesh Maharaj, who heads-up Grains; and Thushen Govender, responsible for Consumer Brands. We're also introducing Polycarp Igathe, who was appointed Chief Growth Officer for the Rest of Africa. After which Noel will conclude the presentation, and we'll open it up to Q&A. Before we begin, I draw your attention to the forward-looking statement. With that, I'll hand over to CEO, Noel Doyle.

So thank you, and good morning. Thank you for joining us either virtually or at our premises. I'm going to do a very brief overview, then we'll get into the nuts and bolts of the business before we do a wrap-up. I think really, I'm not going to dwell on the top half of this slide, which covers the consumer environment and the macroeconomic environment, and one can see from the stats that we've highlighted that it's certainly becoming ever more challenging in an environment that has not been easy, certainly for the last number of years in terms of what we are seeing in terms of consumer behavior and consumer disposable income. What that's translating into in terms of consumer sentiment and consumer wallet is the kind of dynamic that is set out in the bottom half of the slide, where you're seeing a shift in consumption towards sort of the center of plate carbohydrate, if you like, which is where you're seeing some growth where margins for us have been particularly challenged in this period and an accelerating trend of volume decline across many of the other categories. And this really reflects the variability of consumer spend and the extent to which discretionary spend is being eliminated in favor of the very basics across our target market. The stats that you see here are stats for modern trade. But based on a triangulation of different data available to us, I don't think that the trend is markedly different. In fact, we think that if you look at the wholesale and traditional trade sector, the trends are probably more pronounced in that space. When you look at our performance, I mean, it's very clear that in terms of return on effort, there's nothing reflected in terms of the poor results that you see, the disappointing result for this 6 months in terms of our returns. So whilst in the background, we've had very good progress in terms of ongoing improvements in our efficiencies in reducing wastage. And we're ahead of our target in terms of cost savings initiatives for this year. There's been some offset with the cost of loadshedding, which we'll go into in detail. And because of that consumer environment, quite a lot of pricing constraints in terms of trying to maximize or optimize the value-volume equation. A feature of the results, which we'll unpack in more detail, is the significant underperformance or a disappointing level of performance of both our Rice and Grocery business, where we really saw in the -- towards the end of this period, a significant change in the trajectory of those businesses. And on the positive side, within the portfolio, apart from some of the individual domestic segments, which we will take you through, we've been pleased with the sustained progress in exports. When you look at our share performance and our volume share looks better than this graph, but the value share, I think, is a better sort of reflection of the overall health of our performance in the market. There's been a -- a good performance over the last 12 months, 6 months and 3 months in terms of our value share. But that has really come from an overweighting in our milling, retail and wholesale business, and in our Rice business, where as we'll cover in a bit more detail we had actually much tighter margins than we anticipated and where we're seeing much higher levels of price sensitivity. The brands overall in terms of our market share as compared to where we were at the half year. We're pleased with the share performances. But those positive performances have come at the expense of compression in pricing and margins as a consequence of the environment that we've outlined and which you're all familiar with. So at this point, I'm going to hand over to Deepa, who will take you through the detail of the financials.

Thank you, Noel. Good morning, ladies and gentlemen, both in the room as well as virtually. So yes, I think, as Noel indicated, it certainly has been a challenging 6 months for us. The first half performance is reflective where we've seen some recovery in volumes in some of our key segments. However, these were certainly offset by category-specific headwinds that we'll talk to shortly. But in essence, we have certainly seen a high operating cost margin, and that's largely been driven out of the impact of the implications of loadshedding, et cetera. So in terms of our highlights for the 6 months, we have seen some period-on-period volume improvement come through in terms of our key segments such as Bakeries, Snacks & Treats, Personal Care as well as in terms of our Exports business overall. The revenue management program that I've spoken to quite extensively in a number of our previous results presentations, continue to gain traction in many of our areas. And some of the more recent examples include the discount dispersions that we see in our Bakeries category as well as SKU prioritization in the Groceries category, we saw up to 25% rationalization come through. Cost savings, as Noel indicated, is tracking ahead of target, despite the high input cost inflation that we continue to see from a procurement point of view. Specific headwinds, Thushen will talk to the headwinds that we've seen in the Grocery category. But certainly, those volumes have been disappointing in the last 6 months. We saw poor price volume management in the Rice category, which became apparent to us as we were finalizing our half year results. And that's as a result of the billing cycles that have been completed, where we noticed the poor price volume management that had come through. Increase in cost push pressures, like I said earlier on, loadshedding continues to have an impact on our business. The total impact for the H1 was ZAR 76 million with an incremental energy cost of ZAR 48 million for H1. We also saw some headwinds come through in working capital investment, albeit some through deliberate stock build in our inventory, both in raw materials as well as finished goods as well as some issues that have come through in the debtors collection, which I'll talk to shortly. Despite the cost savings ending ahead of the targets, the under recoveries and pricing constraints that we've seen in a number of our categories has certainly resulted in gross margin compression. So having a look at the snapshot of our results, certainly a disappointing result for H1 in what can be only deemed as a very challenging environment. We saw total revenue from continuing operations increased by 16% to ZAR 19.4 billion. This was largely driven by price inflation of 17% and a volume decline of 1%. The volumes held steady, as I indicated in the previous slide, in the domestic business. This was driven by strong recoveries that we saw come through in Bakeries, our Snacks & Treats business, Personal Care as well as good performances seen in Sorghum Breakfast, Rice Beverages as well as the Out of Home categories. The volume declines that were recorded were in our flour to retail and wholesale customers. We saw declines come through in the Sorghum Beverages, the Groceries business as well as Baby, where we saw also a marginal decline come through in the Home Care business. The firm recovery that we saw come through in Exports volumes was partially offset by the significant decline that we saw come through in our Deciduous Fruit business. Gross margins have certainly been impacted, declining from 29.2% to 27%, and that's largely driven by the high input cost inflation as well as the impact that we've seen come through in loadshedding. The group operating income before the impairments and nonoperational items decreased by 9% to ZAR 1.4 billion. But it is important to call out that the prior year period did see the benefit of our insurance proceeds, which amounted to an amount of ZAR 161 million in the prior year, and that was related to the product recall as well as the civil unrest, which took place in July 2021. For comparative purposes, the insurance proceeds in the current financial year amount to ZAR 20 million. And excluding the impact of these proceeds, the group operating income would have actually declined by 2% versus the 9% noted on the slide. The group's effective tax rate before nonoperational items and income before associates slightly increased to 29.7% from the 29.6% that we reported last year. The income from associates increased by 51% to ZAR 275 million. That was largely driven by a strong top line performance, particularly in the Carozzi business as well as the benefits that we saw come through from favorable currency translations. National Foods also reported a satisfactory result in the H1. Earnings per share increased by 2% to [ 749 cents per share ] compared to the 733 cents last year, while headline earnings per share increased marginally to 731 cents compared to the 728 cents in the prior year. In terms of declaration of interim dividend, we are declaring an interim dividend, which is flat on last year at 326 cents per share. As I've indicated, the total revenue was certainly boosted by price inflation, while volumes were supported by recoveries in the key segments, which I've spoken to. We saw 17% at a total level price inflation, offset by the 1% -- partially offset by the 1% volume decline. In terms of domestic revenue, that increased by 16% to ZAR 17.3 billion, and that was driven entirely by price inflation and volume, which remained flat. The Exports and International revenue was driven by price inflation of 15%, ForEx at 4%, but volume decline of 9%. And as indicated, that decline was predominantly driven by the Deciduous Fruit business. Just looking at a snapshot of our income statement. So despite the strong revenue growth that we saw come through, the first half performance was certainly impacted by the challenging operating environment in which we were operating. And that was largely driven by the prolonged loadshedding that we saw come through during H1. Also high levels of inflation and the impact of the interest rates on consumer confidence and disposable income also affected the consumer behavior where we saw consumers certainly shifting to more value-added -- value products. And that, in turn, also affected our volume as well as our basket mix overall. As I've indicated, although the cost-saving initiatives and supply chain efficiencies are delivering ahead of plan for half year. These were unfortunately not enough to offset the high input cost inflations that we are seeing come through from a procurement point of view as well as the further impact of the loadshedding that I've spoken to. Just for comparative purposes, the loadshedding amounted to ZAR 76 million, as I've indicated, comparative to the prior year amounted to ZAR 12 million, so quite a significant impact in terms of the year-on-year movement in terms of loadshedding costs. Operating income was impacted by, like I said, the proceeds of the insurance in the prior year. Sustained marketing investments in terms of our ZAR 1 billion brands as well as the increased distribution, which was led by the geographic mix, reduced direct deliveries as well as the increase in fuel costs compared to the prior year. We also saw an increase in net financing costs for the year. That increased to ZAR 94 million versus the ZAR 34 million in the prior year, and that was largely driven by the impact on the opening cash balance as a result of the ZAR 1.5 billion share buyback that took place last year, increase in working capital requirements as well as the higher interest rate hikes that we saw come through during H1. Foreign exchange loss was reported at ZAR 15 million, and that was largely as a result of the strengthening of the rand against the major currencies, which did affect our translation of our foreign currency cash balances. As noted, the income from associates were strong mainly as a result of the strong top line performances that we saw in Carozzi. So overall, a disappointing result at ZAR 1.18 billion versus the prior year at ZAR 1.3 billion in terms of profit after tax. So I'll just give you a very top line performance in terms of each of the categories because my colleagues will go through the detail. But effectively, all the domestic businesses recorded revenue growth, which were underpinned primarily by price. In terms of the Grains business, while we've continued to see progress in the Wheat to Bread value chain, these gains were more than offset by the challenging performances in the balance of the portfolio, which again were exacerbated by the incremental cost of loadshedding, which amounted to ZAR 37 million in this particular category. Revenue increased by 22% to ZAR 9 billion, reflecting average price inflation of 22% for the category with volumes remaining flat. Operating income declined by 19% to the ZAR 343 million you see on your screen. In terms of the Consumer Brands business, all the segments delivered top line growth, with a particular strong performance coming through from Snacks & Treats as the business recovered from the industrial action that was noted in the prior year in the same period. The Out of Home and Beverages business has also achieved strong growth, while Groceries and the Baby business were impacted by the lower category demand. Overall, this category revenue segment increased by 10%, comprising of price inflation of 10%, while volumes also remained unchanged in this particular category. The operating income declined by 15% to ZAR 555 million, and that was driven by predominantly the underperformance seen in Groceries and the Baby category. Home & Personal Care overall revenue in HPC increased by 16% to ZAR 1.3 billion, and that was primarily driven by the performance in our Personal Care business. This, together with the enhanced factory performances that we saw come through in this category, resulted in operating income increasing by 21% to the ZAR 256 million reported. The Exports and International business increased revenue by 10% to ZAR 2.1 billion, primarily driven out of improved performances coming through in our Exports businesses as well as Chococam. In turn, the operating income for this business increased to ZAR 163 million from the ZAR 64 million that we saw come through in the prior year. So just shifting focus in terms of our cash flow situation. The closing net debt position for the year -- end of -- for the half year ended at ZAR 1.7 billion, which is indicative of the significant investment that we've placed in working capital as well as the low opening balances coming through as a result of the ZAR 1.5 billion share buyback that took place in the prior year. Cash generated from operations declined to ZAR 305 million in comparison to the ZAR 517 million in the prior year. This was largely driven, like I said, by a significant increase in investment in working capital. And this was as a result of an increase in trade and other receivables as well as an increase in our inventory balance. In terms of the inventory balance, this was impacted by inflation in all categories as well as some deliberate increases in stock holding in some of our categories, which include in finished goods, peanut butter in preparation for the site relocation as well as increased our stock holding in our HPC business as a result of an implementation of a significant CapEx in that particular business. We also saw the need to increase stock holdings in certain of our raw material business -- raw material sectors, such as sugar, gelatin and tomato paste. Gelatin and tomato paste particularly being impacted by supply chain constraints globally and the need for us to hold stock as a result of delays being experienced at the harbor, et cetera. So a number of those items have been deliberate increases in our stock holdings. Cash flow was further impacted by the dividend paid, which was declared at the end of last year, amounting to ZAR 1.1 billion. The tax paid amounting to ZAR 462 million as well as the capital expenditure year-to-date amounting to ZAR 448 million in terms of our investment to date. Just having a look at the CapEx performance. So year-to-date, we have indicated a capital expenditure project amounting to ZAR 1.1 billion that has already been approved, where that's been expected to [ filter ] into the rest of H2, bringing our total CapEx for the year to an amount of ZAR 1.3 billion. Most significant items over the last 10 years that you will note on the screen, significant improvements in investment in our Bakeries. We saw a new development in the Durban bakery, our Bellville bakery new build as well as the Hennenman mill revamp that we saw come through. In Other Grains, we saw investment in the new mill in Jungle as well as the extruder and packing line investment in the King Foods business. Groceries also saw quite a significant investment in terms of new fillers, packaging equipment as well as bean blanches and then also the mayonnaise plant relocation in [ Joburg ] that took place. Like I indicated previously, HPC continues to see investment in terms of automation as well as investment in our Baby category in terms of pouch lines overall. And then no different to most players in the industry, we've spent a significant amount of money and investment in the investment of generators and the creation of alternative energy solutions to compensate for the significant loadshedding that we're experiencing. As I previously indicated, the digital journey continues to gain focus and momentum. This entire initiative is focused on identifying efficiency opportunities through automation across our business. We saw an investment come through in warehouse management in some of our categories and warehouses; demand planning and forecasting solution, which is currently being deployed; as well as investment in a procurement tool, which is currently underway, which we expect to see significant volume unlock through improved management of supplier -- supplier and supplier risk; as well as the ability to run RFPs, RFQs and the likes of e-auctions, et cetera. So that continues to gain focus and momentum. In conclusion for my section of the presentation, I think it would be good to just look in terms of what our expectations are going forward. We do expect that the challenging environment will continue. And what will be very critical for us is to remain focused on execution in what can be deemed as an increasingly difficult environment. We expect the current headwinds to persist. We expect loadshedding to continue at high levels. We expect to see ongoing supply chain constraints, both globally as well as locally as local suppliers also battle with the loadshedding. Inflation is unlikely to abate in the near future. And we also expect continued rand volatility, which will also impact us both from an import as well as export perspective. We also expect to see that the consumers remain value conscious, looking for affordable options as disposable income remains constrained. In terms of our mitigating strategies in operating in this environment, we'll continue to invest in automation and innovation to optimize efficiencies; procurement focus in terms of obtaining better pricing and creating cost competitiveness for the business; driving continuous improvement, which would include the likes of recipes, packaging specifications, et cetera; time and motion studies are underway at key sites to also identify opportunities in that space; improved working capital, which will continue to gain our focus, particularly in debt collection in times where we're seeing customers' liquidity certainly being impacted by the impact in their respective businesses as well; as well as improved working capital management from an inventory point of view as we start seeing normalization come through in finished goods, particularly in peanut butter as well as the HPC business. And then lastly, we'll continue to focus on the revenue management program that has certainly served us well in the last couple of periods and also focusing on the next phase of the revenue management project compared to what we've already communicated in the past. So on that note, I'm going to hand over to Yokesh to take us through more detail on the Grains category. Thank you.

Thanks, Deepa. Good morning, ladies and gentlemen. I'll speak to you about the Grains business and get straight into it. At an overall level, revenue increased 22% to ZAR 9 million, primarily driven by price inflation, while our volumes remained flat. We had satisfactory performances in our MillBake, and this is a narrow definition of our wheat-to-bread value chain. But this was disappointingly offset by our Rice business, and I'll speak to you a bit more in detail on that, and to a lesser extent, by our Sorghum-based Beverages, Maize and Pasta business. Our Maize business did see significant inflation in Q1 due to export demand out of East Africa and Mexico. That since corrected itself. And in H2, we're seeing significant margin improvement in our Maize business. The Grains business did incur total loadshedding cost impact of ZAR 37 million at a net basis of ZAR 51 million total in terms of generator fuel. And this was also impacted by the knock-on effects of what we referred to as water shedding. This is where the water infrastructure subsequently fails when the lights -- or electricity comes back on, primarily impacting our Germiston and Secunda bakeries. In our Maize -- in our Bakeries, our focus was focused on volume recovery to maximize the wheat value chain. And this led to margin improvement at a 16% level year-on-year for the H1 reporting period. Other Grains, as I mentioned, was affected by suboptimal price volume management in the Rice category, which was particularly disappointing. And as Deepa mentioned, came to light during the latest billing period. We had significant volume growth in the Rice category at the expense of margin. Overall, though from a Grains perspective, the market share movements that you do see on this slide reflect consumers' preference to lower-cost carbohydrates. To speak to you about Milling & Baking specifically, revenue increased 23%, influenced by price inflation of 21% and volume growth of 2%. Our Bakeries, in particular, benefited from the successful execution of our volume recovery strategy, particularly with our retail customers in the top-end grocers. However, as I mentioned, operating income was significantly impacted, but the cost of prolonged loadshedding and the knock-on effects of water supply as a result. I'm pleased to report though that Albany did reflect share gains ahead of the market, primarily driven by our white bread. It's important to note that in H2, the bread volumes are a bit more challenging as inflation stays stubbornly high and the industry scrambles to fill volume in the respective facility. The Maize category was impacted by significant raw material costs, suppressed byproduct pricing as we had additional rain and surplus of feed, lower volumes and higher conversion costs. The Sorghum-based Breakfast business delivered a muted performance, primarily driven by the high Sorghum prices, which we saw increased circa 35% year-on-year from our exit FY '22 position. This is a result of lower plantings in Sub-Saharan Africa as well as additional rainfall, which favors plantings in the soy crop as opposed to the Sorghum crop. At [ FX ] prices today, Sorghum is more than double the price of Maize on a rand per [ ton ] basis, which points to the challenges that we face in this category as Sorghum Beverages primarily services the needs of lower LSM consumer. We'll speak -- I'll speak to more about this later on. Looking ahead, we're going to be focused on Bread volume recovery in the general trade, which are slightly behind the market while maintaining our strong position in the top-end grocer. We will be launching in this quarter the new positioning for the Albany brand proposition, which I spoke to you about during the results presentations. We're focusing on our CapEx rollout at our respective Bakeries to improve OEEs across the board and also looking at the optimum mix between -- in Sorghum Beverages between volume and value to sustain this category. Moving to Other Grains. Strong top line growth was delivered, but profitability, as I mentioned, was impacted by the unfavorable mix and higher conversion costs. And despite market share growth ahead of the category, rice profitability was impacted by suboptimal price volume management. As stated, this led to an erosion of margins and significantly impacted the profitability of the Rice category. Although the oat-based breakfast, which is Jungle in the Pasta business delivered revenue growth, this was primarily driven by price inflation. Operating income was adversely impacted by product mix, high raw material prices and increased conversion costs due to loadshedding. Oats, in particular, saw raw material prices increased circa 20% between our average FY '22 prices and our current prices. This led to us taking price in market to protect margin in this category and subsequent volume declines. The overall Breakfast category is in decline. Looking ahead, we have targeted promotions in Pasta to improve our volumes and mix. We continue to invest in our pasta plant to improve our quality and build equity. We are looking carefully to improve the price-volume ratio in rice with sustained marketing support to our newly launched innovation in crisps and rice cakes, and we will optimize the mix between our core oats and value-added products in our Breakfast category as consumers continue to have more breakfast on the go. Margins are expected to improve in H2 in our Rice category as a result of the pricing interventions we have put in place. However, the one thing I would like to caution is the divergence of the Thai and Indian rice pricing. And we do see when this gets in excess of $70 a ton FOB, we see a slowdown in Thai rice, which is obviously constitutes our Aunt Caroline and Tastic ranges with the influx of Indian rice into the country. So we will monitor this closely and put mitigation practices in place to optimize price and volume in this category. If we look at our innovations, and I spoke to you at our results presentation in February around this, a big part of the Grains business is to introduce value-added innovations both for the consumer and the margin accretive to us at Tiger Brands. And I must say that the Albany Wraps, the Rice Cakes and Crisps, our new Tinkies innovation, together with our Crunchalot Fillows in Jungle and our Cereal Bars in the Jungle category continue to do well, well received by customers and consumers, and ahead of our own expectations in terms of planning for these innovations. Finally, if I look at the priorities for the second half of the year, we will focus on the new Albany brand proposition. We will be rolling out an improved -- improved recipe for our bread, which has been successfully trialed in our Western Cape bakery in Belleville. We have focused CapEx rollout at our bakeries, as mentioned, to improve our OEEs and focus on our bread volume recovery, particularly in the general trade, while we look to sustain our position in the top-end grocer. Our Pasta business will focus on promotional activity, and we will look to roll out our new category proposition in our new Afro-Italian Proposition. In Rice, as I mentioned, we will implement a revised pricing strategy as we look to reset our margins and do expect some margin recovery in H2. And finally, in Sorghum Beverage, as we look at balancing volume with price management to maximize the profitability within a segment that's primarily focused on the low LSM. And with that, I'll hand over to Thushen.

Good morning, ladies and gentlemen. I'll cover the operational performance in the later slides as we get into the divisions, I thought I'll just spend some time on this slide painting the operational context, in particular, Groceries and Baby where we saw a significant drop-off in the last few weeks of trading in H1. What's obvious from what Noel presented in the first few slides, we have a consumer under significant pressure. The significant socioeconomic pressures that they deal with, the increase in inflation with the spillover effect of the Eskom challenges and disposable incomes are generally at an all-time low. Generally, there's been down trading across all of the categories. And you find consumers moving into the commodity-type products. You see private label, particularly in Groceries, increasing share as well as in the Baby category and cheaper products generally. In the wholesale environment, we have found that when our Baked Beans is sitting off promo at [ 16.99 ], when you have a competing product or a cheaper alternative at below ZAR 10, it becomes an easy choice for the consumer. And in this environment, the elasticities are increasing because the consumer choice is constrained by their disposable income. I'm going to -- Okay. There we go. We're back. Thank you. So this was the slide I covered. The other things to call out here was, I think if you look across Snacks & Treats, excellent performance of the recovery from our industrial action as we regained distribution points, beverages as well, driven by innovation, nice recoveries and the dilutable portfolio recovering from the significant inflation we've seen in the prior year. And we've managed to deal with the price volume margin equation quite nicely in that category as our revenue management principles came to bear. Home Care, Pest and -- saw some recovery despite the slow start to the season, but the balance of Home Care also delivered pleasing results under the Jeyes brands. So you've seen those share gains as well. In Personal Care, as Deepa mentioned, it was certainly ahead of expectation as we continue our journey of reducing the dependency on our seasonal product Ingram's [indiscernible] creams. Our innovation strategy remains on point. I spoke to this a few presentations ago. And really, it's off the back of the growth platforms we've seen in global consumer trends, health and nutrition, convenience and most importantly, in this market value. You see the Energade Zero being launched, which helped us with some share recovery in the last few weeks. Convenience coming through in our Mrs Balls and Tomato Sauce PET range. And then I'll talk through the value propositions later on the Groceries. And then also, if you consider the health and well-being, we're about to launch a reduced sugar range or relaunch our reduced sugar range in tomato sauce. And then we have a reduced oil range up and coming in our innovation pipeline under the Mayo category. So these trends remain on point, and our innovation continues along the slight, but more on the value propositions a little later. Just to reemphasize the point on those last few weeks of trading that hit us in particular in the Groceries category as well as Baby to an extent. Over the 12 months, you saw volume regression in culinary, and this is the market, by the way, at around 4.3%. This doubled to a negative 8% over the 3-month period March -- ending March. It took us for surprise, that's for sure. The extent of trading down into basic commodities or cheap private label offerings. And as you can see across every one of our categories, the volume regression is intensifying. And I'd like to call out, in particular, the canned products -- canned veg products that are decreasing even more significantly if you work out that delta. The -- and as you know, the KOO baked beans has been the heartland of the Culinary business or the Groceries business for some time, and the canned food category has certainly been impacted by what we see in the market. I want to spend some time explaining this. And as I said, most of this really hit us in the last few weeks of trading and was largely unexpected. The point to also call out is, many of the issues that faced us in the category are exogenous in nature. We've had supply chain complexities, which I'll talk to, and also exacerbated by the Eskom challenges. We've had the high inflation that hit us across the board as well as volume regression in key channels. Let's start with the volume regression. Across most of the retailers, modern trade independence and wholesale, those categories are under pressure. However, in the wholesale and independence channel, we've seen a more significant drop off there because those particular consumers that shop that channel are under more pressure from a disposable income perspective. And there were various other challenges from some of our retailers that you know of. So as a consequence, trying to drive price and volume growth in this context was virtually impossible. We've managed to take some price, but obviously, it had that consequential impact on volumes, and there's a bit of a mix effect sitting there as well. The supply chain issues are quite a concern. And let me start with the first bucket. The first bucket is really the vagaries of the agri supply in this current year. We've had a shortage of small white beans. We've had a shortage of vinegar. We've had a shortage of tomato paste in the [indiscernible] part of the season, and we've had a shortage of value-added beans. This is as a consequence to the yields not being where it was expected and as well as the quality. In many cases, we've had to reject the quality like peanuts, for example. And when the crop arrives, you reject it. It's difficult to reorganize your labor in a week and say, go home, there's no work today. Your factory is sit in standing, waiting for this agri to come in and -- or this agri supply to come in. And because of the quality rejections or the lack of crop we've had the under recoveries that you see there impacting us. The other major challenge was Eskom. We can Eskom-proof Tiger with the best of generators, with the diesel tanks. But ultimately, if the entire ecosystem is not Eskom proofed, I'll have factory standing -- factory standing. We've seen that with vinegar, where we actually sent our engineers to our supplier to try and assist with some of their power challenges, generator challenges. So it's okay to solve the Tiger issue, but you've got to solve the supply issue and their supplier. So if that entire ecosystem isn't working optimally, I'm going to have face these sort of challenges that I referred to. Cost inflation across the board: packaging; glass; paste out of China, it was at an all-time high; agri materials; peanuts; small white beans because of the shortages at an all-time high. And in some cases, within these independent channels, where the consumer is most impacted, you've seen over a 2-year period, my KVI is more than 20% in those channels across retail as well, but most impacted by those particular consumers that talk to the volume regression that I mentioned earlier on in the independence channel. So I'm hoping this gives you some context on what hit this business, and it certainly took us by surprise the speed of the drop off in terms of consumer demand. I spent some time talking through the issues, let me just chat a bit about going forward and what this means for the business. We've had some leadership changes, and I'm pleased to say we've appointed an FD, who will be joining in June. We're at the tail end of our interviews for an MD, and I'm hoping that will be resolved pretty quickly. Putting the right people behind our most complex and our most branded portfolio is absolutely crucial for us. We didn't want to rush that. So we made sure we went and found the right individuals. The other focus in the more immediate short term will be driving distribution gains with our secondary lines. We've put a scorecard in place for our salespeople. Don't just drive the KVIs, make sure you get the basket mix into the right channels with the right price pack architecture because that's where the profitability lies, not in trading with the KVIs. If you look at our promotional activity in-store across all channels, combo deals, trying to promote secondary lines are also coming to the fore. I've spoken to you the last time around on fast-tracking innovation for a value economy. We've made some good progress on mayonnaise with the [ Crosse ] range. And I'm pleased to say in the coming months with some modifications at our Boksburg facility, we'll be able to launch a 700-gram PET Crosse product in a large format to act as a Tier 2 product to the Crosse & Blackwell glass range. So across each of our major lines: mayo, tomato sauce, peanut butter, what was the other one, beans, we've had to apply ourselves to what does the value proposition look like in this current constrained environment. So I spoke to you about mayonnaise. Tomato sauce in the coming months, you'll see some activity there as well because we can't take the market-leading All Gold and impact a recipe that's 100 years old. Here, we had to think cleverly. We've got the largest or the most -- the highest [ paste ] concentrate in the market, 32% [ bricks ] upwards, and most of the competitors are below 20% or around 20%. So you don't want to mess around with the All Gold recipe. So we've considered a Tier 2 brand in that space, and it should be coming to your shelf in the coming months. Beans. We're having to revisit the Hugo's range that we've had historically. And then we spoke about peanut butter at the last road show, where the new peanut butter facility gives us the capability to launch a PET format to move the dependency away from the glass range of Black Cat and then also blend the product to a 50% peanut butter -- peanut ratio. And most of the competitors on shelf are 50% and lower. Black Cat Peanut Butter is around 90%. And these are the value engineering or value proposition initiatives that we have to fast track considering the significant drop off in the market. Supply chain is also quite critical, making sure there's efficiencies across the supply chain, making sure we're cost competitive. We're now looking at a time and motion study at our Boksburg facility, where we have just under 1,000 employees. We're revisiting our shift structures. We have to prepare and gear up for a low volume environment. So we have to revisit demand, our S&OP cycle and the shifts that's going to drive the production. So we're looking at that. And then the other aspect is automation. We've looked at some CapEx to automate the end of line on -- in our canned veg facility, which will also bring labor savings to the fore. So across the entire supply chain, there's a plan to reduce costs, which we are trying to fast track in this current environment. So a little bit of good news. We've managed to see some good recovery off the back of the industrial action that -- in the prior year, although it was slightly behind expectations, I must admit. We did shut down the facility in quarter 1 to redesign some of our systems as well as our quality regime to make sure we continue to build the safest products on shelf for our consumers. So there is a bit of a drag on the recoveries. The good thing about this portfolio, it's well suited to all LSM profiles making sure you've got a premium range under your slabs and your TV bar all the way to an affordable proposition of the wonder bar and the smoothies. With this recovery in the business, the focus is on making sure we have the right product in the right channel and driving activation accordingly. Asset care also remains a critical focus. We have -- we're cognizant of the fact that we have an aged facility. We've intensified our maintenance regime, engaging with OEMs, having the right critical spares at the facility, and ultimately, where required investing in renewing our lines. But at the same time, applying ourselves here again to efficiency and automation. We're about to automate one of our packaging lines, which will allow us to not only reduce headcount but participate a lot more in occasions we've been solely short as the South African brand during Christmas, Valentine's Day, Mother's Day because we just didn't have the pack format to feature for these special occasions. With this new equipment about to be commissioned, we'll be able to put some nice, exciting assortments on shelf. The other point I'd like to close off on this slide is the breadth and depth of this portfolio is quite significant. We participate in gums and jellies, candies, chocolates. It's difficult to be an innovator in every single aspect of this portfolio. So we've reached out to a few global players, 2 in particular, and have conversations on how we step change our innovation. I'm hoping at least one of them gets concretized in the coming months, which will be a game changer in our Chocolate business. Moving on to Beverages, just a few points here. We hit some major inflation, as you know, with our Oros range last year, 20-odd percent increase in inflation. We've had to cost engineer the product. We've looked across the value chain, identified savings in the packaging, the logistics, the facilities and managed to invest some back into price to remain competitive. On Sports Nutrition, we lost some ground because in the previous year, our competitor was not in market due to some supply chain challenges. They now came back into the market. However, in the last few weeks, as I mentioned, we're gaining quick ground with our innovation under the Energade Zero as we gain distribution. Very quickly looking ahead, drive on-the-go consumption as well as on-premise consumption going deep into [indiscernible] channels, making sure we have the right amount of -- the right product in the right channel, and we're also investing quite significantly behind cold availability with mini-fridges that we can also place into the general trade to ensure we have cold availability across all channels. We spoke to the regression in this category. And the main reason is basket penetration has reduced as shoppers are trading out of the category into general product solutions. They look in -- when they buy a cereal, they're buying it for the whole family, not just a specialized cereal for baby. When they buy a lotion, they buy it for the entire family, not just a baby lotion. So that trading out of the category into general product solutions is impacting this particular category. Looking ahead, here again, it's about value propositions. We're revisiting some of our products to being offered under Purity. Looking at Maize-based offerings, which could possibly help reduce costs or will help reduce costs so that we can get to the right price points. And then also exploring [indiscernible] Baby and doing some UNA research around whether that brand can stick in this category. On Home Care, there was a slow recovery in the past season because it hit us later than expected. However, the margins held quite nicely given that there was quite a bit of inflation that was built in from the prior year. The balance of Home Care did exceptionally well under the -- with the relaunch of Jeyes, and there's opportunity here again to drive this further in the wholesale and independent space. Personal Care as well, as I mentioned earlier, the balance of the Personal Care range, we had good renovation projects under the hair care range, nice innovation under depilatories and then the functional creams that I spoke to about half a year ago. So essentially, the innovation on this -- in this category is on point, and we're managing to drive distribution gains in the category across the channels quite nicely. Looking ahead, the focus would obviously be on the new aerosol line that we're commissioning, and this will give us more capability in innovation under pesticide as well as air care. And in this category as well as Baby, we've had some internal moves. So I'm looking forward to those 2 MDs bringing their respective expertise as well as a fresh perspective to the category. In closing, my last slide on left, there has been an improvement in global trading conditions. We noted at the previous presentation that we are quite nervous about the -- whether the pricing is going to come off because Greece was not in the market. They had a crop shortage because of the drought about 2 years ago. They're back in the market, but interestingly enough, pricing on canned fruit held, and we saw some inflation. And you saw the pricing of purees almost double over a 2-year period, driven by the demand for fruit juices and particularly in emerging markets. So the pricing dynamics as well as the exchange rate is supporting what we think would be a credible second half. However, bearing in mind there are some challenges. The same cost pushes we saw in culinary around Eskort, around tin cans, around sugar has affected this business quite significantly as well to the tune of ZAR 40 million for those particular items that I called out. As we look ahead, this business has been a question mark in our portfolio for some time. The strategic fit still remains what we've communicated to you. It's an exporter into markets that are nonstrategic in nature, mainly dealing in private label. So there's a lack of strategic fit. Therefore, this asset has been held for sale, and we've reinitiated the sale process. We've commenced with at least 1 due diligence, which is in progress as we speak. And in the interim, we will continue to manage this business for profit responsibly, but the year ahead is also subject to all the stakeholders coming to the party because we had the same -- we had engagements with labor, the growers in the prior year, which allowed us to continue this business for another season. So as we hold this business and contemplate a potential sale, we will also manage it if the outcome over the discussions with stakeholders are favorable. At this point, I'll close and hand over to Noel. Thank you.

Good morning, ladies and gentlemen. I'm very pleased to present the outcomes of our kick started and restarted journey of growing again in the continent of Africa and the balance of the continent. And my message is really 3 things that we are out to take the purpose of this business, which is to nourish and nature lives across the continent. That nourishment we are doing through targeting and working on the needs by people in Africa to have the right nutrition for snack -- snackification and also for health. Those 3 buckets of needs are really required, and that is the demand that we are feeling. And we are feeling that demand -- we are feeling that demand with products out of the Tiger basket here working with key distributors. If you look at the return on our effort, as Noel would put it in the last 6 months, we've ended up with a 25% growth in revenue in the last 6 months. So we are off to a positive start, but that's an early result of a low base. And then secondly, we are also profitable. When our CFO presented our numbers deeper, you clearly saw that we took in a price increase because our ability to price in the price increase told us that we have brand equity. The brands have equity and consumers in Africa still believe in brands. So we were able to land the price increase. But at the same time, grow volume. And that is what you're seeing in the numbers there and operating margin, which we anticipate to sustain going into the future. The second message around kick starting our journey is the point around Africa, there is a big opportunity to fetch in Africa. But this time, as Tiger Brands, we have learned from our lessons, we are going with care and humility, Understanding that Africa is a continent that is really changing because it's really urbanizing. And a lot of times, the urbanization on the continent is underestimated as a driver of consumer goods. When you look at the cities across the continent. The second thing is around the demography, 1.2 billion people average age 19, they eat 5 times a day. They live in cities. So consumer goods is really a need that is continuing to grow. And so as we do that, we are very clear that the strength we are bringing is the strength of our brand assets here the manufacturing assets that we sit with in our headquarter country, which is South Africa, but making them a truly pan African business and then bringing together the entrepreneurial ability of very many key distributors on the continent. So using those key distributors. And what we have seen is a really good return from exports into the Zimbabwe, Zambia, Mozambique geography, a very good return from our efforts in Chococam. It really supported by very good market execution in market, fulfilling demand at the right level and executing correctly at the point of batches with the distributor. Basically, what you're seeing here is the remediation of operational efficiency and brilliant basics market execution in country. And also, the key remediation has been around our demand focusing, our sales planning, our logistics and our factory performance, especially at Davita that has delivered that. Worth speaking about the risks on the continent, it's a risky continent. It's very easy to -- the opportunity needs to be fetched but there are risks on the continent. And I really would like to call out 1 big risk that you see, the regulatory hurdles that are coming through. We see Judicial insecurity in Chococam, where if you look at our books, we are faced with [indiscernible] order. We are going to continue using the legal route to resolve the matter. But regulatory hurdles continue to be a big challenge. I'm sure all of us understand the grey listing of South Africa that now demands companies such as ourselves to make sure that all our entrepreneurial partners are compliant and this is expected, not just of us, but also the entire market, the ecosystem, including competitors. And that we expect in the short term as people raise the level of compliance might affect the [indiscernible], the pace, the tempo of shipments of goods into the rest of the continent, but we are optimistic that we can do it because the relationship of our distributors go back over 5 to 10 years. Tiger has presented those relationships over time. So that is what I'd like to speak to. But going forward, we are looking to add -- grow into white spaces, especially into the [e-commerce] market, the common market, for instance, Southern Africa. We're also looking at the [indiscernible], the Western Africa and especially concentrating on Nigeria. In the EAC region, we're looking at Kenya as a beachhead. We're also adding Angola into the SADC entity within the Southern African region. So I'll be happy to take any further questions on that, but really try to show you that our strategy is underpinned by 3 pillars. The first pillar is market development and brand development with key distributors with key distributors model and lastly, inorganic growth. We are very aware that we tried this in the past and so we will be pulling back. We are carefully looking and hunting into the future. That is Horizon 3. But we are looking to improve competitiveness and drive our growth with exports and also continue to drive the efforts we have with Chococam consolidate our position. It's worth noting to all of you and all of us in the room that Chococam is based in Cameroon, but the Chococam revenue close to 23% of it, and we intend to grow is exported into the Central African economic and monetary area, that's where we export out of. So we are using South Africa to go into SADC, Cameroon room to go into the CEMAC region and the biggest brands that we sell into the continent basically, our condiments and our ingredients, we do -- there's a lot of fusion between me and fellow growth officers around our home and personal care brands, especially the pesticide doom, as you know, Africa. There's a big need for that. We're also working around the breakfast cereals, the super foods, oats and Sorghum that comes out of our Grains business and our Mill-bake business. So bringing the super foods to nourish lives, working with entrepreneurs to naturalize on the continent, and that's really the mission that we have started. Very pleased with the results for the last 6 months, but we start to see that this growth is off a low base, and there's still a lot of more work to do in an environment where we have to navigate risks carefully. Thank you very much for listening to me. Now I invite Noel to come.

So in wrapping up, just going to talk to the fact that I suppose if you had an x-ray machine and you could look beneath the surface, you would see that there has been significant progress as we've set out here against our strategic pillars in dealing with some of the exogenous factors that we have highlighted in the course of the presentation. So in terms of our innovation rate is exceeding that of the market. We've had some specific successful innovations. So we've cleaned out the innovation pipeline so that we can focus more on larger, more meaningful big bets and to take complexity out of the organization. Across the portfolio, you can see that in terms of the market share performances, whilst it is a mixed bag, there have been some very strong performances in some of our businesses. In the engine room of the organization, the efficiencies and the cost savings that we've spoken about and committed to are being delivered across the consumer brands business that's been assisted again, by the simplification theme that assists in cost savings. So we've reduced over the last 2 years across the total consumer brands portfolio, SKUs by 25%, just quite a significant progress in that regard. And as far as our igniting our people is concerned. We've had positive engagement scores in the last round, and we have filled almost all of the key vacancies that we entered the new financial year with. The CapEx, despite the low rate of disbursement, the fact that we've already approved the ZAR 1.1 billion worth of projects is an indication that we're getting momentum in that space. [indiscernbile] very much in this environment on efficiencies and automation and where it's end of life we have looked at capacity. The growth prospects for our Rest of Africa business, while still off a low base, are certainly looking positive and we're moving in the right direction there. And Thushen spoke about leveraging potential partners. So there are a few larger initiatives, which we believe that we can be more effective and where we can derisk ourselves by partnering with some companies that have global expertise, and we are progressing that and doing all of that whilst trying to maintain our progress in the ESG environment. Of course, when you don't have the x-ray, what you see is what's on the outside, quite clearly in the operating environment that we're in, our prospects are -- sorry, in our operating environment, the prospects from an external perspective are -- we don't think the consumer environment is going to get any better anytime soon. In fact, it will probably deteriorate. And what that means for us is that in the second half, we think it's going to be quite a challenge to match the prior year second half performance in terms of our operating income, certainly not something in free fall, but it's going to be a challenge to get back to that same level of performance. We believe we are well equipped to deal with load sheddings with the caveat again that Thushen mentioned that internally, we're certainly well prepared. We've prepared ourselves as well as we possibly can in terms of assessments of supplier and supply risk. And that's a partial contributor to some of the working capital moves on the inventory line. We know what we need to do to fix the issues in rice and groceries. And again, to reiterate the rice issue is very much an internal issue, the grocery issue is really about speed of response to the external factors and the extent to which we've seen the fall off in demand in that area. In bakeries, we've seen the second 6 months of last year, the first 6 months of this year, some positive progress. We need to sustain that momentum. To do that, we've put in place specific initiatives in the general trade, where we've certainly lost traction whilst gaining traction in modern trade. And we're going to continue to focus on our sustaining our export performance. But we also have to recognize that in this environment, we will have to recalibrate the investment in growth initiatives. In growth that may not come in an improved environment that may not come in terms of consumer demand. And so we're going to have to and have already started some aggressive reviews on a route and branch basis of both the activities and the costs that drive the activities within the organization. There is no doubt that in this environment, to maintain our competitiveness, the level of cost savings that we've committed to previously, even though we're meeting them, are not sufficient to deal with the external factor. And we have to accept that reality. We need to proceed with some caution. We don't want to find ourselves in the position that we have in the past where we have had significant underinvestments in certain aspects of our business, like information technology, for example. But at the same time, we have to confront what is in front of us and what's likely to be in front of us in terms of a challenging environment. So I think we're very clear about what we need to do. We're very clear about what this performance represents for us as a management team and have pretty specific actions already underway to address those issues. And certainly, in the case of the 2 outlying underperforming businesses to make sure that those businesses are set for a much, much better financial year '24. Thank you.

Thanks, everybody. If we could just lift the screen and bring the [chairs over] for management, so we can take it to the Q&A. Okay. We can open it up. If you can just wait for the mic so that the people on the webcast can also hear the questions.

Shaun Chauke from Nedbank. I've got a couple of questions, but I'll just ask 2 for now. And then if we do have time, I'll ask follow-on questions. So the first 1 is would you say there is a structural increase in demand for snacks especially given a lot of the innovations we've seen on the shelves on this category coming from you? Or is this a function of you gaining market share from peers? And if this category in particular, do you see an opportunity for dealer-owned brands, particularly given that there's an opportunity to still price at a premium. We've seen it with the likes of [indiscernible] on the [indiscernible] brand where they're doing premium chocolates. And the second question is, I mean, having seen most of the food cycles in terms of the consumer challenges, be it across the value chain commodities, you name it. What would you say is the blueprint to successfully navigate the cycles without being significantly impacted? Or is this environment the most challenging it's ever been in terms of history for the consumer cycle.

Hello. Can you hear me? So thank you for that question on Snacks & Treats. You would have seen from the data, there's actually category regression from a volume perspective. So in particular, over the last 3 months, you've seen that hit the category. With regards to the innovation, I think historically, we haven't been that focused on innovation. So our innovation is focusing in areas where we have firstly capacity. That's quite important to note. And as we drive innovation and excitement in the category to keep the consumer in the category given the volume regression and the tough conditions. We're also driving efficiencies. [No spoke] to the SKU rationalization. So the mindset almost needs to be 1 in, 1 out and when it's nonperforming, be quite diligent around your category management principles because it's in the best interest of EU as well as the retailer by removing those nonperforming SKUs and bringing in some excitement to try and stimulate demand during tough trading conditions. So let me come back to the capacity aspect. We have had some capacity challenges that we were looking at line investment. So in that -- in those particular lines, we hold back on significant rates of innovation, focus on the high-margin SKUs and actually discontinue the low-performing ones, and we've become a lot more focused in those instances. We're also trying to develop an innovation -- offshore innovation pipeline, working with strategic partners where we can bring in products without the complexity to the supply chain. The last question on the retailer or the brands or dealer-owned brands. We have engaged with our retailers, where we do have capacity. And the 2 -- maybe about 1 or 2 guardrails there, firstly it has to be margin accretive. Secondly, we obviously need to have the capacity and not sacrifice the brand volumes. And thirdly, there still needs to be a point of differentiation. It can be the same product on shelf with another brand slept on to it. So we're quite critical on that, but we see that as a great opportunity to deepen our strategic alliance and best practice category management principles with the retailer. The last 1 on cycles, you want to take that?

I mean I'll take that. I'd say, look, this is definitely the most sort of difficult period, I suppose, the last 12 to 18 months have been sort of the most unique and challenging set of external circumstances. I think we've had periods of spikes in certain commodities in terms of food price cost push. We've had periods of higher interest rates. It's been a while since we've had anything like this level of inflation. And when you combine that with some of the global supply disruptions as well as some of the challenges we've had with agricultural crops and the load shedding. It's definitely incredibly challenging, but it's the same environment for everybody in the marketplace. So the blueprint has to be absolutely ruthless ability to execute with agility and with speed and an ability to respond to data what is different to sort of some of the previous challenges is that data is much more readily and speedily available and responding and interpreting that data quickly is quite key. And in this environment, you just cannot afford, you never could, but it's even more of an emphasis now. You can't afford any fat. You really have to be lean muscle. For me, that's the blueprint for operating now and you're going to have to make sure that whilst you worry about longer-term sustainability. It's important that you survive to be there for the future rather than worry about the future and see the ground shift underneath you in the short term.

Vik from RMB Morgan Stanley. I mean I just wanted to know, obviously, there was a 4-month update that was issued on 21st of Feb, which kind of pretty much said that there will be strong growth in operating profit and that operating profit is minus 2%. I think Thushen explained that there was an issue with groceries. And I think just in particular, in those 5 weeks, I think, which has been the businesses which have just kind of changed, let's call it, diametrically oppositely in terms of kind of leading to minus 2% from a strong growth that you had guided to. I think specific -- I mean, is it just Grains or groceries? Or I mean, is it just across the board that things changed in those 5 weeks?

Vik, I'll take that question. Yes, look, I think there's been 2 categories, particularly that have impacted us in the last couple of weeks, the 1 being the fall that we saw in the Groceries business, which Thushen spoke quite extensively to, but the other 1 was particularly around the rice business, which, as I indicated in the presentation. As a result of the recent billing cycle, what we identified was that there was a poor price volume management of that particular category. And effectively, the impact of that poor price volume management came to light in the last week and a half to 2 weeks as we were trying to finalize the H1 results. So in terms of that shift over the last couple of weeks, it's largely been driven by the impact of the rice business as well as the volume impact that we saw in Groceries.

There has been generally a slowdown as well across other categories in the Consumer division. I spoke through the baby category where you see basket consumption regressing, shoppers trading out of that category and going into general product solutions. If you look at the market dynamics, the trial, the 6, the 3-month that volume regression is on a trended decline. And there may be 1 or 2 blips, but the trading conditions are getting quite tougher as inflation comes to bear and increases as well as these socioeconomic conditions that we referred to. So it is getting tougher across most of the consumer divisions categories.

It's Myuran from MIBFA. The first question is on the [bread] side of things for U.K., I suppose. You sort of touched on it, I think, and correct me if I'm wrong, but the post period end the competitive behavior. Can you talk a little bit more to that? What's happening there? And why you mentioned people are trying to fill up volumes and things like that. Can you elaborate on that? I have another follow-up.

So the post-period reporting, and it's just a glimpse of the last few weeks, we have seen quite aggressive discounting taking place, particularly in the general trade, where we've seen an opening of oil price points to not necessarily the second competitor, but 3 and 4, it's causing a swing in unit share or volume share, but not necessarily profitable levels across the bread value chain. And I'm talking about the industry in general. So a big part of our reset, if you're going to call it in the general trade has been trying to identify where we go, where we play, understand the routes that we go to understand the price points that we go to, understand the offerings that we put in, i.e., brown bread -- brown bread, white bread, [indiscernible] loaf, et cetera, because I think that's where we are seeing the strongest pinch in terms of consumer spend, not necessarily direct from a shopper perspective, but we have seen an encroachment in some of the mass discounters into the [Spaza] territory that are offering bread and general commodities -- commodities in general at very aggressive pricing. So that's a flavor of what we're facing over the last few weeks. And it speaks to, I suppose, a bit of what Noel and Thushen spoke to. I think the squeeze on the consumer will see that accelerate. This latest interest rate hike where the Reserve Bank will put a further pinch the economy and the impact of load shedding on our shoppers and consumers are certainly going to be felt even further as we enter the winter months. So the price [stroke] value dynamic is going to become more and more important in the next 6 to 12 months.

The second question is just a follow-up on the rice question. Sorry, maybe you can explain it like you explainto a 6 year old. How does the billing cycle not recognized faster within the system?

So effectively, what's happened is that the level of discounting that's been a provider from the category to customers was a lot higher than initially anticipated. When we refer to the billing cycle, this came to our attention effectively as the billings were coming through from customers, retailers to us. And at that point in time, in the last 2 weeks, we saw the magnitude of the deals that were actually being provided versus what was originally anticipated. So that's what we referred to. And there is a significant lag in terms of bills coming through from customers to Tiger Brands versus when the deals are actually provided implemented to customers.

This particular category, the parameter that we're given to trade were outside mandate. We have quite a strong robust internal control policy that we -- that's followed by every other category, which we've doubled checked since. We did investigate in the quarter when we looked at prices, and the anomalies didn't jump out at us until we got the billings back from customers which raised a flag.

It's very simply, it's a noncompliance with policy at a very senior level. So one of the things that we have tried to do in terms of agility, is giving more control back to the managing directors and the management teams of the individual categories within guardrails. And in this case, those guardrails were breached.

It's Sumil Seeraj from SBG Securities. Just reading the updates on the Grains division, it does look as if that volume strategy in bakeries did pay dividends in this first half compared to the poor base last year. Would that be correct? Because I think there was operating profit growth?

16% operating profit growth and just over 10% volume growth. So we brought leverage to the income statement.

So I'm guessing it was [maize] largely within milling and baking that pulled back the operating profit growth. Was it largely because of a procurement position?

It was a combination of our procurement position. So in Maize, we typically aren't as long as we are would be in wheat. But at the end of our Q4 last year, we did signal promotional activity to the trade. And at the end of Q4, there was a significant run on the Maize prices at a [indiscernible]. They will because of the impending imports, exports to East Africa and Mexico, where there was a deficit of white maize. So it was a combination of our procurement position. We were shorter than, like I said, typically would be in meat and then the actual rally in our Q1. That self-corrected in Q2. And like I say, we're seeing significant margin improvement in our current operating environment. We were also impacted by the Sorghum beverage business where I stated sorghum at the moment closer to ZAR 7,000 a tonne compared to white maize at a [suffix] spot price at about ZAR 3,500 a tonne. So those were businesses.

Sorry. And then just the outlook for the second half on that maize things have stabilized.

Expecting a significantly improved performance in our maize business. The only caveat I'll put to that is apart from the [indiscernible] prices in Q1, the by-product prices we were seeing were 30% to 40% lower than we anticipated and less than last year. And that's a result of 2 things. One, the higher rainfall, which means a higher amount of felt available to [indiscernible]. And we saw a large amount of imports of grain from -- for feeding from now neighboring countries at substantially lower prices. We are seeing a slight reversal of that in the short term.

And Sorry, just 1 last question while we're on bread. You mentioned Albany's repositioning strategy. Can you just elaborate, is that smaller loaf, the value loaf that you mentioned in the last results?

So when I spoke about the brand positioning, it's actually about the Albany -- it's actually about the Albany brand itself. So our results presentation, I spoke about the appointment of a new agency that we did. We've completed what we believe is, I think, a fantastic positioning for the brand, brand positioning, speaking to the love of Albany and the freshness and the taste, which we hope to go to market in July of this year. In terms of -- when you speak about the smaller loaf and the value loaf we have introduced it, particularly in outlying areas where we have a presence of less than 20%. And that's work in progress. It's a sunny day loaf, and we continue along that trajectory.

[indiscernible] from [indiscernible] Capital. I just have a question that's more about decision-making. So when it comes to contract manufacturing or manufacturing for private label. I just want to understand the comment that you made about incremental -- that must left off the margin. You're talking about incremental margin on what's getting through. Are you talking about the absorption costing within the factory line that brings up the margin of the entire factory? Is it the group? Is it the division? Can you just elaborate on that a bit, please?