Impairments hit Tiger Brands’ earnings


Impairments hit Tiger Brands’ earnings

Published Date: 2020-05-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

Impairments hit Tiger Brands’ earnings

The group has impaired some export operations due to ongoing trading difficulties that have been exacerbated by Covid-19.

Tiger Brands has warned that the decline in its first-half profit will be more severe than previously expected after it impaired some of its businesses.

In an updated trading statement, the fast-moving consumer goods group said earnings for the six months to end-March were impacted by a significantly higher impairment charge of R557 million, up from R106 million last year. This was mainly due to its export operations, including powdered soft drinks and seasoning business Davita and the Deciduous Fruit business. It also recognised an impairment against its investment in Nigerian associate, UAC Foods.

For the period, it expects earnings per share (EPS) from total operations to be between 75% and 78% down from the 864c it reported last year, while EPS from continuing operations are likely to be 74-77% lower. It said earnings in the previous period benefitted from the once-off after-tax profit of R282 million following the sale of some of its shares in Oceana Group to Brimstone Investments. In a February update, the group guided investors to expect to decline of at least 36% in EPS.

Last month, Tiger Brands said its strong balance sheet meant there were no pressing liquidity challenges at the moment and it would consider the appropriateness and/or quantum of any dividend declaration for the period after taking the prevailing circumstances into account. A due diligence of its Value Added Meat Products (VAMP) business, which was linked to the listeriosis outbreak more than two years ago, had been completed. It said it had received offers from a consortium for the business on a going concern basis, including the Polokwane, Olifantsfontein and Germiston operations.

It expects to release its results next week. Its shares fell 10% to R159.50 yesterday.

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