Former SABMiller executive takes the helm as Tongaat’s new CEO
John Gavin Hudson will spearhead group strategic review, the sugar producer says
Tongaat Hulett had appointed former SABMiller executive John Gain Hudson as new CEO effective from February, the agriculture group said on Monday.
The appointment of Hudson, who replaces former long-serving CEO Peter Staude, could herald a shake-up in the underperforming sugar producer.
In the past five years, Tongaat has lost 57.27% of its value on the JSE, compared with the all-share index’s growth of 16.32%. In the matching period, the food producers index was up 13.62%. In the 2017/2018 financial year, Tiger Brands’ headline earnings plunged 37.2% to R617m.
Staude, who had been at the helm of the group since 2002, retired in November 2018 as the company’s strategy to sell some of its prime land in KwaZulu-Natal appeared to hit a snag.
The company attributed its fall in earnings in the six months ended September 30 2018 to the conclusion of fewer-than-expected land sales. In the six months, Tongaat suffered a headline loss of R87m, compared to R661m in 2017.
Giving a glimpse into his priorities, Tongaat said on Monday Hudson would lead the strategic review and direction of the group “in order to restore shareholder returns to acceptable levels, improve cash generation and reduce debt levels”.
It described Hudson as an accomplished business executive with considerable experience in diverse and challenging markets in the alcoholic beverages industry.
“He was previously the Beer Group president and chief executive officer of Anadolu Efes, a company listed on the Turkish stock exchange. Prior to this, Hudson served as the managing director of Anadolu Efes’ beer businesses in Turkey and Russia and spent 26 years within SABMiller, holding senior roles both in South Africa and internationally,” the company said.
Chris Logan of Opportune Investments applauded Tongaat on Monday for opting for someone without the sugar industry experience “as they need to be dispassionate about sugar and judge it on its merits, notwithstanding their history as a sugar company”.
Logan, however, said Hudson had his work cut out for him.
“My information is that their sugar mills are aged and in need of a lot of maintenance and that they have sold most of the best pieces of land. I would also expect write-offs of Zimbabwe assets and of course there is the mountain of debt,” he said.
Tongaat's share price was down 2.68% at R50.12 on Monday.