Tiger Brands H1 profit up, writes down Nigerian unit

(Reuters) – South Africa's biggest consumer foods maker Tiger Brands Ltd reported a small rise in first-half profit on Wednesday, held back by rising raw material costs at home and its underperforming Nigerian unit.

Tiger Brands, which makes cereal, energy drinks and rice, said diluted headline earnings per share (EPS) rose 6 percent to 848.7 cents in the six months ended March.

Headline EPS is the main profit gauge in South Africa that strips out certain one-off items.

Sales rose 11 percent to 14.9 billion rand ($1.43 billion)

Tiger Brands, along with its rivals, has been weighed down by rising raw material prices due to the weaker rand currency, while debt-laden consumers cut back on spending.

In a bid to offset slow growth at home, Tiger Brands has been looking to the rest of Africa and put Nigeria at the heart of its expansion plans.

However, its recently acquired flagship Nigerian business Dangote Flour Mills (DFM) has been losing money, forcing Tiger Brands to write down 849 million rand of its value.

"We are currently implementing short to medium action plans which include reducing DFM's fixed cost base, mothballing of mills where appropriate and rebuilding the brand equity of its product basket," said Peter Matlare, chief executive officer of Tiger Brands.

Tiger Brands paid $188 million for just over 60 percent DFM two years ago.

($1 = 10.4368 South African Rand)

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