Tiger Brands warns of hefty writedowns as economy deteriorates
The groups says it will see write downs of R557m in its half year to end-March, mainly related to its export businesses
SA’s largest food producer, Tiger Brands, warned in a trading update on Wednesday that a deteriorating global outlook will result in some of its business being written down by R557m in its six months to end-March.
This will mostly affect its export businesses, namely Davita, which produces soft drink powder and seasoning, and its deciduous fruit business.
An impairment was also recognised against the investment in Nigerian associate, UAC Foods, the group said, which results from difficult trading conditions due to deteriorating economic prospects, exacerbated by the Covid-19 pandemic.
Earnings per share are expected to be between 75% and 78% lower than the 864c reported in the prior comparative period, the group said.
The group, which has a market capitalisation of about R32bn, saw writedowns in the prior period of R106m.
Earnings in the previous period benefited from the abnormal after-tax capital profit of R282m rising from the sale of Oceana shares to Brimstone.
In afternoon trade on Wednesday, the Tiger Brands share price had fallen 4.98% to R168.40, having fallen about 20% so far in 2020.