Tiger Brands Ltd., South Africa’s largest food company by market value, beat profit estimates for the full year and said weak consumer spending will continue to weigh on Africa’s largest economy.
Net income climbed 5 percent to 2.7 billion rand ($303 million) in the 12 months through September from a year earlier, the Johannesburg-based company said today in a statement. Revenue advanced 11 percent to 22.7 billion rand. Earnings per share rose 4.6 percent to 16.72 rand, beating the median estimate of 16.54 rand of 13 analysts surveyed by Bloomberg.
“Tiger’s grocery division turned around this year,” Diane Laas, an equity analyst at Investec Asset Management, said by phone from Cape Town. “Volume growth was achieved at the sacrifice of some profitability as prices had to be realigned to suit the current tough consumer market.”
South African consumers are under pressure amid unemployment of 25.5 percent and economic growth that will slow to 2.5 percent this year, the lowest since the 2009 recession, according to government estimates. The Reserve Bank cut the benchmark lending rate to a 30-year low of 5 percent on July 19 to support the economy.
Tiger Brands, the biggest bread and rice seller in South Africa, agreed to buy Dangote Flour Mills Plc of Nigeria from Dangote Industries Ltd. for 30.1 billion naira ($191 million) in July as part of a plan to expand outside South Africa. Growth in the rest of the continent was robust with Tiger’s operations “contributing positively” to profit growth, the company said.
Tiger Brands fell 1.4 percent to 274.07 rand in Johannesburg by 12:40 p.m. About 65,000 shares, or 13 percent of the daily average over the last three months, changed hands. The FTSE/JSE Africa All Share Index climbed for a third day, rising 0.3 percent.