Tiger Brands Impairs $134 Million in Nigeria as Profit Drops

  • Company looking at options for shareholding in Nigeria unit
  • Food producer says outlook for year ahead is `challenging'

Tiger Brands Ltd., South Africa’s largest food producer, wrote down the full value of its Nigerian milling unit and warned that operating conditions in its home market are deteriorating after full-year profit declined.

It impaired the value of Tiger Branded Consumer Goods, formerly known as Dangote Flour Mills, and Deli Foods, a separate business in the West African country, by 1.9 billion rand ($136 million), the Johannesburg-based company said in a statement on Thursday.

The writedown adds to previous impairments of 954 million rand after Tiger Brands bought the business for about 1.5 billion rand in 2012. It paid 276 million rand for Deli Foods. Growth in Africa’s largest economy has dropped to the slowest pace this decade following a plunge in prices for crude, its main export, while currency restrictions have also brought unease to businesses and investors.

“Tiger Brands is currently exploring various alternatives with respect to its shareholding in TBCG,” it said. The company “will endeavor to find a suitable solution for TBCG´s operations.”

While the maker of Black Cat peanut butter and Albany bread’s operating income in its home market of South Africa gained 11 percent to 3.6 billion rand in the year through September, the company warned its “outlook for the year ahead remains challenging, with low domestic economic growth, rising costs and job security concerns weighing on the South African consumer.”

These concerns are exacerbated by the weakening rand, which has declined 17 percent against the dollar this year, fueling the cost of imported ingredients, Tiger Brands said.

Earnings excluding one-time items from continuing operations declined 1 percent to 17.86 rand a share for the year ended Sept. 30 from 12 months earlier, Tiger Brands said. It declared a final dividend of 6.11 rand per share, unchanged from 2014.

The company’s stock rose 3.6 percent to close at 336.82 rand by the close in Johannesburg, paring losses this year to 8.5 percent.

Chief Operating Officer Noel Doyle has been appointed as interim chief executive officer from Jan. 1 after the current CEO steps down, the company said.

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