Tiger Brands’ CEO on huge Nigerian loss and 2014 annual results

Tiger Brand’s released its full year results this week for the year ended 30 September 2014. They weren’t pretty. Here veteran business journalist, Alec Hogg, questions the group’s CE, Peter Matlare, on the shortcomings and accountability of the massive loss incurred with its Nigerian Dangote Flour investment.

Hogg also takes Matlare to task on Tiger Brand’s response to losses, as well the group’s performance over the last year, where Matlare accepts that it has been a poor showing.

Despite this, it does appear that the group is continuing its Africa growth strategy with renewed focus, wisdom and more support from its international shareholders than before. 

ALEC HOGG: In the full-year results, Tiger Brands reported a 21 percent drop in its earnings per share, largely due to impairments on the Group’s investment in Dangote Flour Mills. Turnover was up 11 percent to just over R30bn. Joining us on the line is Peter Matlare, Chief Executive of Tiger Brands. Peter, thanks for coming onto the line with us. We’ve just had South Africa’s favourite stockbroker, David Shapiro, in the studio questioning why you went into Nigeria in the first place and why heads haven’t rolled. It’s nearly R1bn that you’ve written off, on Nigeria. You’ve no doubt, had to field similar questions from other shareholders.

PETER MATLARE: Yes, of course, Alec. Strategically, we still believe that Nigeria is a market we should be in and in which we’ll remain. The assets that we bought in Nigeria are not dissimilar to categories in which we play in South Africa, so we’re talking about flour, pasta, and noodles. Granted, David was absolutely correct in that we’ve had a poor showing in this last year. We wrote off R846m worth of goodwill and now, another, in terms of the physical aspects of the business… We’d always indicated to the market that at the year-end, we would assess the carrying value of those assets, and we’ve written off another R105m. Having said that, we’ve reduced losses significantly, relatively to last year. We think that directionally, we are doing the right thing.

We’ve changed management in that market. I would have though David would have been on top of that. We’ve certainly changed management in that market. We’ve re-launched certain parts of those businesses, so it’s a flexi-business. That’s where we are with that business.

ALEC HOGG: He said that he felt that maybe Aliko Dangote or whomever was selling to you, saw you coming, Peter.

PETER MATLARE: Alec, we’ve had this said to us many times. There are really, two parts to it. The one is that we looked at the assets. We believed we were getting the right set of assets. He was the seller and we were the buyer. The onus is on us, as the buyer, to value correctly, what we’re buying. If we erred, or we went wrong, there have been consequences because of that. My arguments to everybody is that we fundamentally, still believe we’re in the right market and that we have a decent set of assets that we have to bring to good account.

ALEC HOGG: The reality of this though, is that you have been pulling in a lot of criticism. It’s R1bn that you’ve written off in a R72bn business, just to keep it in context. Is it spooking you? Is it going to make you a little more cautious now of aggressively pursuing your Africa strategy?….

www.biznews.com: Read/listen to the full interview here

Additional reading:

Tiger takes another hit on Nigerian adventure: BDLive

How Nigerian mogul outsmarted SA global food giant: BDLive