By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Tiger Brands Ltd said on Wednesday it full-year profit ended September 30, dipped 22 percent to 2.02 billion rand ($183 million) from N2.58 billion reported last year due largely to impairments relating to the group’s investment in Dangote Flour Mills (DFM)
The South African consumer goods maker said it has written off $9.5 million (105 million rands) following a review of the utilisation level of certain assets of Dangote DFM, according to a statement from the company.
“DFM conducted a review of the utilisation levels of its assets and, based on current market realities, decided to impair certain of its manufacturing assets. The related impairment, amounting to R105 million, is in addition to the R849 million impairment of goodwill and other intangibles announced at the half year. Tiger Brands remains committed to the Nigerian market and will continue to fix and optimise the DFM business, whilst investing into adjacent categories that are expected to deliver long-term profitable growth,” Peter Matlare, CEO of Tiger Brands said.
In the second quarter of the financial year, the company had written down 849 million rands in DFM and 68 million rands of impairment following the acquisition of Deli Foods in Nigeria which it bought in 2011.
“Expansion into the rest of Africa remains core to Tiger Brands’ growth strategy and looks extremely promising,” said Matlare. “Although consumers are seeking aspirational brands and increased variety, the reality of low disposable income levels places limitations on consumer spending. To this end, product format, pack size and price points remain key to achieving success.”
According to Tiger Brands CEO, existing businesses in Nigeria remain a key focus area, with the priority being to fix and grow these businesses.
He affirmed that significant progress has been made in addressing the challenges in DFM and, as a result, the net reported loss before interest and tax for the Nigerian businesses improved by 27 percent to R282 million (2013: R384 million). ‘’Tiger Brands acquired an additional 2.3 percent interest in DFM for R74 million as part of the mandatory offer to DFM minority shareholders,’’ Matlare added.
A further review of the full year result of the company shows that headline earnings per share from total operations was up 11 percent to 1 816 cents while headline earnings per share from continuing operations increased by 15 percent to 1 804 cents. Earnings per share from continuing operations declined by 21% to 1 243 cents.
The South African firm declared a final dividend of 611 cents per share together with the interim dividend of 329 cents per share brings the total dividend for the year to 940 cents per share; indicating a nine (9) percent increase compared to that of 2013.
