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UPDATE 2-South Africa's Tiger to cut costs after 2020 earnings hit

* FY HEPS down 23%

* Sells 8 personal care brands

* Cuts 400 jobs

* Signs of recovery in FY 2021 (Adds strategy plan, FY 2021 outlook)

JOHANNESBURG, Nov 20 (Reuters) - Tiger Brands is targeting cost savings of 500 million rand ($32 million) in the year ahead, its chief executive said on Friday as South Africa’s biggest food producer’s headline earnings per share from continuing operations fell 23%.

The owner of popular brands Jungle Oats and Tastic rice said it had concluded a sale agreement for eight personal care brands, including its Gill shampoo and Lemon Lite facial cream brands, its CEO Noel Doyle said during a media call.

“As we intend to focus our investment behind some core brands, we have to look at whether or not we’re the best owners for some of those smaller brands,” he added.

Outlining a brief growth plan, Doyle said Tiger Brands will look at different models that include joint ventures, venture capital and earning revenue from licensing its brands.

The firm is also looking at e-commerce opportunities to monetise on the demand and will start with a pilot project to sell one of its products directly to consumers via online shopping as opposed to retail clients.

Doyle said that a lot of the savings for the 2021 financial year, which began in October, are expected to come from improved efficiency in factories, utility costs, negotiating better terms with suppliers and from alternative sourcing.

“We’ve taken some direct costs and some people out of the head office as well,” Doyle added.

Tiger Brands was showing positive momentum so far in its 2021 financial year, with some signs of recovery in pasta and rice after a “dismal” 2020, he told analysts.

The maker of Albany bread said it will pay a final dividend of 537 cents per share for the year after withholding an interim dividend, and top it with a special dividend of 133 cents per share as a result of the one-off proceeds received from the disposal of its processed meat business.

However, Tiger Brands shares were down 2.43% at 1340 GMT.

“The message is very clear to us that a much improved performance in the current financial year 2021 is a non-negotiable and by performing in this period, we hope that we will restore some investor confidence,” Doyle said. ($1 = 15.4427 rand) (Reporting by Nqobile Dludla; editing by Muralikumar Anantharaman and Jason Neely)

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