Johannesburg - Tiger Brands, South Africa’s largest food and household goods company, missed full-year profit estimates as weak consumer confidence in its domestic market and an acquisition in Nigeria weighed on earnings.
Net income fell 5.5 percent to 2.6 billion rand ($255 million) in the 12 months through September, the Johannesburg-based maker of Albany bread and Doom insect repellent said today in a statement.
Earnings per share excluding one-time items decreased by 3.8 percent to 16.24 rand, lower than the 17.16 rand median estimate of eight analysts surveyed by Bloomberg. Revenue advanced 19 percent to 27 billion rand.
“The difficulties facing the group have been driven largely by the trade-off between the group’s ability to recover cost increases through appropriate pricing and the pressure on consumers to purchase at acceptable price points,” Tiger Brands said.
South African consumers are under pressure amid unemployment of 25 percent and economic growth that will probably slow to 2.1 percent this year, the lowest since the 2009 recession, according to government estimates.
Consumer confidence in Africa’s largest economy dropped to a 10-year low in the third quarter as inflationary pressures curbed spending.
Dangote Flour Mills of Nigeria, which Tiger Brands bought last year as part of a plan to expand outside South Africa, posted an operating loss of 389 million rand, according to the statement.
“As with other acquisitions made on the continent, we expect that it will take two to three years to fully align the operations to Tiger Brands standards and for the business to deliver acceptable returns,” the company said.
Tiger Brands shares gained 2.2 percent yesterday to 310 rand.
The stock has declined 4.7 percent in the year to date. - Bloomberg News