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Tiger brands profit hit by Nigeria

20 November 2013, 16:02Reuters

Johannesburg - Local consumer foods maker Tiger Brands [JSE:TBS] disappointed investors with a 4% fall in full-year profit on Wednesday hit by losses at its recently acquired Nigerian business.

Tiger Brands, which makes bread, breakfast cereal and energy drinks, said diluted headline earnings per share totalled 1 584 cents in the year to end-September from 1 654 cents a year earlier.

That was below the 1 725 cents forecast from Thomson Reuters SmartEstimate, which puts more weight on estimates from top-rated analysts.

Shares in the company fell 3.72% to 298 rand by 09:20, lagging behind a slightly lower JSE Top 40 index.

Tiger Brands said its Nigerian business, Dangote Flour Mill, suffered a R389m operating loss because of bad debts provisions, as well as once-off job cuts.

The company paid $188m last year to buy control of the Dangote Flour as it looks for new revenue streams to offset slowing demand and tough competition at home.

"The results are disappointing and reflect a difficult transitionary phase as we reposition our domestic business and drive expansion in Africa," said chief executive officer Peter Matlare.

Consumer demand in the economy remains tepid, given the weak economy and as banks tighten their lending criteria. Shoppers have also been squeezed as the weaker rand currency fuels inflation and higher petrol prices.

Tiger Brands said sales rose 19.1% to R27bn.


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