HOWDEN Share price: R29,75 JSE code: HWN
THE BEHAVIOUR OF
Howden’s share price, down 30,8% over the past year, reads like a Charles Dickens novel: it was the best of times, it was the worst of times.
The best was seen on June 23 when the price jumped up by 12,6% to R33. But less than a month earlier, on June 1, Howden led the decliners on the Alsi after it came off by 12%.
The reason was an announcement by the company that it would halt cash dividends.
That alone is a reason to sell the share. Shareholders have not sniffed a dividend since August 2013. Now it seems they will not see a dividend for some time to come.
The dividend announcement came on June 1. Because of what it called market imperatives and the need for strategic flexibility and vision, “the payment of ordinary cash dividends [will] be discontinued for the foreseeable future”.
Strategic flexibility, says CE Thomas Bärwald, could be BEE transformation or a similar transaction, share buy-backs, or acquisitions and investments.
The cold reality, though, seems to be that Howden just can’t afford to pay dividends.
There should be some sympathy for the devil in the interims (to end-June).
Revenue and profits were gassed out because Howden supplies industries such as power generation, mining and construction.
There’s not much to get excited about in these industries at present, and neither is there in Howden’s share. ega deals from company directors were few and far between last month, but there was some fancy footwork from Woolworths’ top brass, with the retailer’s share price touching record highs.
The shares of the company, whose food stores in particular have become a staple of well-heeled South Africans, have soared 34% in the past year to around R100/share as it revitalises David Jones, the department store it bought in Australia for R23,3bn last year.
Four Woolworths directors qualified for share awards under its long-term incentive scheme, so they then sold part of their stock to pay the tax on these shares.
CEO Ian Moir qualified for R11,18m worth of shares, newly appointed South African CEO Zyda Rylands qualified for R4,49m. Sam Ngumeni got stock worth R3,4m and Thobeka Sishuba-Mashego qualified for R2,95m worth.
Moir also bought shares worth R17,9m he was awarded under the restricted share plan.
Then, Moir sold shares worth R4,6m to settle his tax obligations, Rylands sold stock worth R6,6m for the same reason, Sishuba-Mashego sold shares worth R3,1m and Ngumeni sold stock worth R1,97m.
If Woolies’ stock continues to do as well as it has in the past three years it’ll prove to be a savvy move for the bosses to have hiked their exposure to the retailer.