Tiger Brands still looking hard at Africa
Business Day - Nov 24th 2011, 09:02
TIGER Brands , SA’s largest food producer, was still "looking hard" for acquisitions in Africa, CEO Peter Matlare said yesterday, even after the company spent R2,1bn on the continent last year.
Mr Matlare said the company was well on its way to bedding down these transactions.
In June the group acquired Davita Trading, an SA-based export company. It acquired 51% of the food and consumer interests of East Africa Group of Companies in Ethiopia and of biscuit manufacturer Deli Foods in Nigeria, and 49% of UAC Foods, also in Nigeria.
The company said the economic environment had become increasingly challenging as consumers continued to come under pressure during its financial year ending September, the results of which it released yesterday.
Tiger Brands posted a 6% rise in turnover, from R19,4bn last year to R20,5bn, despite a 2,3% decline in volumes.
"With less disposable income the South African consumer has become more judicious. They are asking, what can I take out of my basket, instead of, what do I put in," Mr Matlare said.
Operating income increased 7,6% to R3,2bn. Excluding the acquisitions, operating income grew 4% to R3,1bn and the operating margin improved 10 basis points to 15,7%, Tiger said.
Profit before tax increased 19,1% to R3,6bn (2010: R3 bn), which included a R91,4m one-off abnormal credit related to the take-on gain arising from the recognition of National Foods Holdings as an associate company, as well as the employer share of pension fund surpluses amounting to R44,3m.
The company said it held its 25,7% shareholding in National Foods, a Zimbabwean milling and consumer goods business, for many years but has not recognised its share of earnings from it due to the hyper-inflationary economic climate in Zimbabwe.
Subsequent to the financial year-end, the group increased its shareholding in National Foods by 11,7% to 37,4%. From October 1 it will equity-account its share of earnings from the company.
Divisional performance was varied, with snacks and treats — a largely discretionary spending category — hit hard by the downturn in the macroeconomic environment. Industrial action in September also limited production levels, leading to an overall loss that month.
The colder winter dented the performance of the beverages division while the company faced fierce competition in its grain and milling operations, which saw heavy discounting by rivals.
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