Tiger Brands' Nigerian arm hit by naira weakness

Tiger Brands, South Africa's biggest consumer foods manufacturer, reported flat first-half earnings on Wednesday, weighed down by its operations in Nigeria.

Tiger Brands, which makes cereal, energy drinks, pasta and rice, said diluted headline earnings per share fell by 1 percent to 837 cents in the six months ended March. Headline earnings per share is the main profit gauge in South Africa that strips out certain one-off items.

Sales rose 7 percent to 15.9 billion rand ($1.3 billion).

The company incurred significant foreign exchange losses in Nigeria, where its struggling Dangote Flour Mills business was hit by a 25 percent devaluation in the naira, partly related to the impact of lower global crude oil prices.

But Dangote Flour Mill's underlying trading performance was healthy, which resulted in a 38 percent reduction in its trading losses, excluding currency effects.

The company wrote down the value of its Nigerian arm by 849 million rand in May last year and by another 105 million in November.

It said further foreign exchange losses could hit its Nigerian business in the second half of the year. The full inflationary impact of the weaker naira is yet to be felt by consumers in the country, Tiger Brands said.

In Kenya, its Haco business was hit by pre-invoicing to manipulate profit in the previous year, the company said. Tiger Brands said it had taken steps to correct this.