Tiger Brands said full-year profit dropped 22 per cent after South Africa's largest food producer wrote down the value of two businesses in Nigeria.
Attributable profit declined to 2.02 billion rand ($183 million) in the 12 months ended 30 September from 2.58 billion rand a year earlier, the company said. The average of nine analysts’ estimates compiled by Bloomberg was for 2.69 billion rand.
Tiger Brands will impair the value of its Dangote Flour Mills business in Nigeria by 105 million rand, in addition to an 849 million-rand write down in the first half, it said. The company also recognised 68 million rand of impairments relating to its acquisition of Deli Foods, a biscuit manufacturer in Africa’s largest economy, which it bought 2011.
"Although the short-term challenges relating to DFM persist, there are encouraging signs of improvement as remedial actions to improve product quality, reduce the fixed-cost base and drive top-line growth start to bear fruit,” the company said.
Tiger, which makes Jungle Oats and All Gold tomato sauce, bought a 63.5 per cent stake in Dangote Flour Mills from Dangote Industries in September 2012 for about $190 million, its third and largest purchase in Nigeria. Tiger targeted acquisitions in the West African country as it saw limited opportunities in its home market.
"The group expects to sustain the positive momentum that was achieved during the year under review, despite a continued difficult trading environment in both the domestic and international businesses," the company said.
Bloomberg News, edited by ESM
