Tiger Brands suffered setbacks in its foreign businesses after operations in Nigeria were affected by devaluation of the naira coupled with a weak performance by the Kenyan business, Haco Tiger Brands.
The foreign losses were however offset by solid performance in the domestic business.
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Tiger Brands reported headline earnings per share from continuing operations of 853 cents comparable with 855 cents for the same period last year.
The group’s six months ended 31 March 2015 results saw a domestic turnover growth of eight per cent being driven by volume growth of two per cent and pricing inflation of six per cent.
“Through effective management of price, volume and margin, operating profit from the domestic businesses grew by nine per cent, notwithstanding the heightened level of market competition and significantly higher levels of marketing investment,” read [DATA TBS:Tiger Brands Limited] statement.
“There was a modest improvement in the domestic operating margin, demonstrating the resilience and power of the group’s brands in challenging times.”
The group added that the short-term macro-economic environment in Nigeria deteriorated significantly during the period under review following the sharp drop in crude oil prices.
“This resulted in volatility in the country’s financial markets and a 25 per cent devaluation of the Naira against the US Dollar,” said Tiger Brands.
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“This has significantly affected the performance of the group’s Nigerian businesses, in particular Dangote Flour Mills (“DFM”), which carries short-term US dollar borrowings to fund its imported wheat purchases.”
Tiger Brands’ total group turnover increased by seven per cent to 15.9 billion rand, whilst operating income before IFRS 2 share option charges declined by three per cent to 1.7 billion rand.