Tiger Brands writes off R850-million in Nigeria’s Dangote Flour
Writing off the investment in Africa's largest economy will see the food company's earnings half of that achieved in the previous financial year.
Tiger Brands, South Africa’s largest food company, will write off about half of its investment in Dangote Flour Mills less than two years after buying a majority stake in the Nigeria-based producer.
Tiger, which makes Jungle Oats and All Gold tomato sauce, will impair Dangote Flour’s value by R850-million because of "underperformance" and "excess milling capacity that continues to increase in the Nigerian flour market," the Johannesburg-based company said on Wednesday.
Tiger bought a 63.5% stake Dangote Flour Mills from Dangote Industries in September 2012 for about $190-million, its third purchase in Nigeria. The company targeted acquisitions in Africa’s largest economy as it saw limited opportunities in its home market.
Tiger sees earnings per share for the six months ended March 31 falling as much as 55% from a year earlier because of the write-off, it said in a statement. Excluding the impairment, profit from continuing operations will improve 6% to 10%, Tiger said.
Tiger erased losses of as much as 2.8%, gaining 2.4% to R283.32 by 11.09am in Johannesburg.