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Johannesburg - South Africa's biggest consumer foods maker, Tiger Brands [JSE:TBS], will mothball some mills at its Nigerian unit in an attempt to turn around the money-losing maker of pasta and flour by 2016.
Tiger Brands, which also reported a small rise in first-half profit on Wednesday, has been trying to turn a profit from Nigeria's Dangote Flour Mills since paying $188m for about 63% two years ago.
But the Nigerian company, whose half-year pre-tax loss widened by more than 10% on Wednesday, is struggling with tough competition, forcing Tiger Brands last week to write down the value of the business by R849m.
"We've got to cut our coat to fit our cloth," Peter Matlare, Tiger Brands' chief executive said in a telephone interview.
He did not say how many of Dangote Flour's five mills would be mothballed or how many jobs would be affected.
"We are not just going to cut our way into profit, we have to drive revenue growth too and that business by 2016 ought to be breaking even," Matlare said, adding that new high-margin products could be added to the production line.
He said Nigeria, where Tiger Brands competes with Nestlé Nigeria, remained central to its expansion plans, despite a low-level insurgency in the north.
Boko Haram, a militant Nigerian Islamic group, grabbed world headlines with the abduction of more than 200 schoolgirls a month ago and has claimed responsibility for a series of car bombs and gun attacks, which have killed hundreds of people.
"I don't want to downplay the importance of what's going on in Nigeria, but I really don't think it's something that should uncharacteristically gain primary focus. We have to run our business as best as we can," said Matlare.
Tiger Brands posted a 6% rise in diluted headline earnings per share (EPS) in the six months ended March.
It was also held back by rising raw material costs at home, where consumer spending has slowed due to high personal debt levels.
Headline EPS is the main profit gauge in South Africa and strips out certain one-off items.
Sales rose 11% to R14.9bn
The rand, which has weakened about 20% this year, has pushed up imported input costs for Tiger Brands and rivals such as Pioneer Food Group and AVI.
Shares in Tiger Brands rose 1.7% to R294 by 13:49, outpacing a flat JSE Top-40 index.
Tiger Brands, which also reported a small rise in first-half profit on Wednesday, has been trying to turn a profit from Nigeria's Dangote Flour Mills since paying $188m for about 63% two years ago.
But the Nigerian company, whose half-year pre-tax loss widened by more than 10% on Wednesday, is struggling with tough competition, forcing Tiger Brands last week to write down the value of the business by R849m.
"We've got to cut our coat to fit our cloth," Peter Matlare, Tiger Brands' chief executive said in a telephone interview.
He did not say how many of Dangote Flour's five mills would be mothballed or how many jobs would be affected.
"We are not just going to cut our way into profit, we have to drive revenue growth too and that business by 2016 ought to be breaking even," Matlare said, adding that new high-margin products could be added to the production line.
He said Nigeria, where Tiger Brands competes with Nestlé Nigeria, remained central to its expansion plans, despite a low-level insurgency in the north.
Boko Haram, a militant Nigerian Islamic group, grabbed world headlines with the abduction of more than 200 schoolgirls a month ago and has claimed responsibility for a series of car bombs and gun attacks, which have killed hundreds of people.
"I don't want to downplay the importance of what's going on in Nigeria, but I really don't think it's something that should uncharacteristically gain primary focus. We have to run our business as best as we can," said Matlare.
Tiger Brands posted a 6% rise in diluted headline earnings per share (EPS) in the six months ended March.
It was also held back by rising raw material costs at home, where consumer spending has slowed due to high personal debt levels.
Headline EPS is the main profit gauge in South Africa and strips out certain one-off items.
Sales rose 11% to R14.9bn
The rand, which has weakened about 20% this year, has pushed up imported input costs for Tiger Brands and rivals such as Pioneer Food Group and AVI.
Shares in Tiger Brands rose 1.7% to R294 by 13:49, outpacing a flat JSE Top-40 index.
