South African firm writes down Dangote Flour Mills

South African firm writes down Dangote Flour Mills

Wednesday, November 19, 2014 12:11 pm

Dangote Flour Mills

Dangote Flour Mills

Tiger Brands Ltd, South Africa’s biggest consumer goods maker, took another write off charge at its money-losing Nigerian unit, it said on Wednesday, as it posted an 11 percent increase in full-year profit.

Tiger Brands, which makes pasta, energy drinks and breakfast cereal, wrote off 105 million rand ($9.5 million) of certain factory assets of Dangote Flour Mills following a review of their utilisation levels.

The impairment comes within a year of an 849 million rand write down of the same business, which suffered a 6.28 billion naira ($36.2 million) pre-tax loss in August as it struggles with tough competition and weak margins.

Tiger Brands has been trying to turn profit from Dangote Flour Mills since paying nearly $200 million for a controlling stake two years ago as part of broader plan to expand into rest of Africa to offset slow growth at home.

The Johannesburg-based company said Nigeria, where it competes with Nestle Nigeria, remained central to its expansion.

Tiger Brands also reported an 11 percent increase to 18.16 rand in headline earnings per share (EPS), helped partly by cost cuts at home, where debt-laden consumers are spending guardedly.

Headline EPS, the widely watched measure of profit in South Africa, strips out certain one-off items.

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