(Adds details, quote)
By Chijioke Ohuocha
LAGOS, March 31 (Reuters) - South Africa’s Tiger Brands is still interested in investing in Nigeria despite pulling out of a flour milling business it acquired that never turned a profit, local conglomerate UAC said on Friday.
UAC’s chief executive Larry Ettah said its partnership with the food company was paying dividends and in recent conversations the South African firm had said Nigeria remained important as it looked to expand abroad.
Tiger bought 49 percent of UAC’s food business in 2010 but since then it has had to sell its 65.7 percent stake in its loss making Nigerian flour division for $1 to Dangote Industries Ltd, owned by Africa’s richest man Aliko Dangote, having bought it for $200 million in 2012.
“We have had conversations with our partners ... and they made us understand that Nigeria is still important to them,” Ettah told an analysts’ call discussing its full-year earnings.
The joint venture company UAC Foods Limited posted a pretax profit of 1.14 billion naira last year, down from 1.43 billion naira, though Ettah said the company “was still paying dividends”.
Shares in UAC, which have lost 23 percent so far this year, closed flat on Friday at 13.65 naira. They fell 19 percent last year. The group posted a 0.52 percent rise in pretax profit and declared a dividend of 1 naira per share.
Ettah said frequent input cost rises was pressuring margins in the food business and the weak economy had also affected consumer demand.
No one at Tiger was immediately available for comment.
Africa’s biggest economy is in recession for the first time in quarter of a century and also battling a currency crisis brought on by low prices for oil, its main export, that has hammered foreign reserves and created chronic dollar shortages, frustrating businesses.
Tiger Brands, South Africa’s biggest consumer foods maker, has had some management changes, Ettah told the call, which has led to a review of its strategy and that in their communications “they still see Nigeria as an opportunity.”
Tiger Brands has said its other businesses in Nigeria, UAC Foods and Deli Foods, would not be affected after it sold off the flour business. (Editing by Greg Mahlich)