South Africa’s Tiger Brands FY profit up after Nigeria sale

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JOHANNESBURG, NOVEMBER 23, 2016 – South Africa’s biggest consumer foods maker, Tiger Brands, on Wednesday reported a 19 percent rise in full-year profit after disposing of a loss-making Nigerian unit.

Tiger Brands reported a 2 percent rise in headline earnings per share (EPS) of 2,130 cents on continuing operations but a 19 percent jump in headline EPS to 2,127 cents on operations including the Nigerian unit.

Tiger Brands paid nearly $200 million for a 65.7 percent stake in Nigeria’s Dangote Flour Mills in 2012. But it failed to stem losses at the venture and sold it for just $1 in December last year.

The maker of cereals, baby food and snacks, has said it is reviewing its strategy of expansion in Africa, which accounts for around 20 percent of its business, and has sold out of an Ethiopian venture in June.

Trading conditions in key markets Nigeria, Angola and Mozambique are tough. Tiger Brands plans to push a wider range of its products into African markets, Chief Executive Lawrence MacDougall told reporters.

Higher grain prices has pushed up inflation in South Africa to above 6 percent which will impact the first half of its 2017 financial year, the firm said.

Other South African food producers, such as Pioneer Foods , said earlier this week that a severe drought and the weak economy will weigh on their performance.

“We expect that to taper off in the second six months as we get the benefits, hopefully, of a much better crop in maize and sorghum in particular,” said chief financial officer Noel Doyle.

The firm will give an update on its strategic review in six months, MacDougall said.

 

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