Tongaat Hulett CEO Peter Staude to go sooner than expected
Floundering sugar producer Tongaat Hulett said on Monday the retirement date of its long-serving CEO had been moved forward — a welcome announcement in the eyes of analysts keen on a shake-up.
CEO Peter Staude, who reached the retirement age of 65 in June, shortly after being the target of a scathing Investec Securities report, will retire at the end of October — earlier than previously stated.
CEO since 2002, Staude said in June the transition process was expected to be completed only by April 2019.
An interim CEO would be appointed while the board finalised a process to identify a permanent successor, Tongaat said on Monday.
Tongaat said in a separate statement that CFO Murray Munro, who joined the group in 2003, would leave his post with immediate effect for health reasons, and senior finance executive Rob Aitken would replace him in an acting capacity. Munro would remain an employee and would return after an extended medical leave of absence.
In late May, Investec Securities analyst Anthony Geard said that after 10 years of negative cumulative free cash flows, declining returns, and zero cumulative earnings or share price growth, "we think it is time for the CEO since 2002 to step aside".
The report came days after Tongaat said headline earnings for the year to March fell 37.2% to R617m – well short of its own guidance to investors.
Investec Group, which sponsors Tongaat’s JSE listing and has other commercial ties to the sugar producer, later distanced itself from the report and apologised to Staude for embarrassing him. Old Mutual Investment Group portfolio manager Warren Jervis welcomed Monday’s announcement that Staude would step down, saying he was "very supportive of the Investec Securities analyst [Geard]".
Tongaat had issued an "exceptionally poor guidance" for its year to March, and had arguably underperformed relative to its potential in the 16 years that Staude had been CEO, mainly because of "the unutilised capacity within the sugar division".
"So, in my opinion, it’s time to go," Jervis said.
Munro was "an excellent" finance chief who would have been a good candidate for the CEO role had he been in good health, he said.
"He works his socks off, but he obviously needs time to recover and we wish him a speedy recovery," Jervis said.
Neither Staude nor Munro received bonuses for the year to March because the headline earnings threshold of R800m had not been met. As a result, Staude’s remuneration, excluding long-term incentives, fell to R10.1m from R16.7m, while Munro’s was R6m from R8.5m.
Tongaat said that Staude had agreed to continue advising the company after retiring.
He had "exemplified integrity and commitment, and he served the interests of our stakeholders with distinction", the company said.
Tongaat’s share price closed 0.8% up at R83.28 on Monday.
Its shares have lost more than half their value since reaching highs of more than R170 in 2014.