South Africa’s biggest food producer Tiger Brands said on Wednesday it took a R557 million ($30.86 million) impairment charge on its export businesses as trading conditions remained difficult amid the coronavirus pandemic.
The impairment led the owner of Jungle Oats and Tastic rice to revise its earnings per share forecast for the six-months ended March 31 to between 74% and 77% lower than that in the same period last year, from a previously guided decline of 35%.
At 1202 GMT the company’s shares were 7.69% lower at R163.60.
Tiger Brands kept its forecast for headline earnings per share, the main profit gauge in South Africa, unchanged at a decline of as much as 36%.
The impairments relate mainly to the firm’s export businesses, namely Davita, a powdered soft drinks and seasoning producer, the Deciduous Fruit business and its investment in Nigerian associate, UAC Foods, it said.
“These impairments are as a result of the continual assessment of risks associated with these businesses amid ongoing trading difficulties due to deteriorating macro-economic prospects, exacerbated by Covid-19 led economic challenges, as well as adverse category dynamics,” Tiger Brands said.
In February, Tiger Brands said the export division was significantly impacted by a legal dispute with a former distributor in Nigeria, resulting in virtually no sales into that country. The division has also been hit by ongoing foreign currency shortages.