Pioneer shares tumble after shock news of CEO's exit
The share price of consumer brands conglomerate Pioneer Foods plunged on Friday on news that highly rated CEO Phil Roux would retire in October.
Despite a reassuring tone in the accompanying Sens announcement, Pioneer’s shares were unceremoniously marked down almost 7% to a new 12-month low of R118.
Roux — a former Tiger Brands executive — joined Pioneer in May 2013 and has been credited with revitalising the company’s fortunes by focusing on its best-selling brands and implementing a successful cost-cutting regime.
When Roux took the helm, Pioneer’s share price was about R77. By October 2015, the price had breached the R200 level but retreated in the last 18 months as tougher trading conditions took hold in the consumer sector.
A trading update released in mid-August disclosed that turnover at Pioneer – which holds brands such as Sasko, Bokomo, Marmite, Redro, Liquifruit, Moir’s and Ceres – decreased 4% for the 10 months to end-July 2017.
At that time, Pioneer maintained it would be judged on its ability to increase market share in a contracting environment, the restoration of margins and overall financial performance in relative terms.
The company said management was “positive that 2018 will portend greater upside and a recovery opportunity for the company at large”.
Even at Friday’s depleted price, the share has still grown more than 50% under Roux’s leadership. Friday’s market reaction to the retirement news confirms that shareholders expected Roux’s tenure to be more enduring. Market watchers mostly concurred that Roux had ticked all the boxes in transforming Pioneer, save for delivering on a large offshore deal.
The retirement announcement also sparked speculation — the most notable being a theory that Roux and the company’s main shareholder, PSG (via Zeder), might have differed over an acquisition strategy in the dour trading environment.
Roux told Business Day he had “run very hard” in the past few years and it was time to take a break. He said Pioneer remained a robust food group with strong assets and brands.
Roux’s successor, Tertius Carstens, is a long-serving executive who joined Pioneer in 1994. Carstens serves as business executive for Pioneer’s essential foods division, the largest profit hub.
Pioneer chairman KK Combi stressed the company had made an effort to build leadership depth. Only weeks before Roux’s retirement announcement, Pioneer underwent an executive shake-up. Groceries division executive Felix Lombard was promoted to chief financial officer, with strategic marketing officer Martin Neethling taking the reins in the groceries division. Bakeries division boss Riaan Heyl was promoted to business executive of the essential foods division.