Investec Says CEO of South Africa's Tongaat Hulett Should Resign
(Bloomberg) -- Tongaat Hulett Ltd. Chief Executive Officer Peter Staude should resign, an Investec Ltd. analyst said this week, citing prolonged underperformance by South Africa’s biggest sugar producer.
The company reported “appalling” full-year results on Monday after saying in November it was poised for positive earnings and cash flow, analyst Anthony Geard said in a May 30 report seen by Bloomberg. Tongaat has had 10 years of negative cumulative free-cash flow and declining returns, he said.
“We think it is time for the CEO since 2002 to step aside,” Geard wrote.
Tongaat didn’t immediately respond to emailed questions and Investec said it could not immediately respond to queries. Geard declined to comment on the report. South Africa’s Business Day newspaper reported the news earlier.
Tongaat said May 28 it lowered its dividend 47 percent and reported a 37 percent decline in so-called headline earnings for the year. Operating profit fell 16 percent and net debt rose.
Tongaat’s results show a “painfully slow pace of unlocking value” from land sales after the company missed its targets on disposals, the analyst said. Tongaat said at the start of its financial year that it was in talks to sell 233 hectares (576 acres) but only sold 96 hectares, Geard said.
Tongaat declined 2.1 percent by 2:33 p.m. in Johannesburg, bringing this year’s drop to 31 percent.
“Management change and a higher reference price in SA to set import tariffs would be positive catalysts for the stock,” Geard said.
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