Dra­matic board­room shake-up loom­ing

Finweek English Edition - - FRONT PAGE -

THE not en­tirely un­ex­pected “res­ig­na­tion” of Thys Loub­ser as CEO at KWV Hold­ings might in­duce mixed feel­ings among the vo­cif­er­ous mi­nor­ity share­hold­ers in the Paarl-based liquor group. Finweek would suspect those en­cour­aged by de­vel­op­ments might well be out­num­bered by share­hold­ers who are feel­ing a tad jit­tery – again.

Only months af­ter see­ing off a takeover bid by Pi­o­neer Foods, some KWV mi­nori­ties may be for­given for feel­ing slightly daunted at the prospect of keep­ing a han­dle on a dom­i­nant an­chor share­holder. Un­like PSG/ closed its fi­nan­cial year to end-June 2011. That might sug­gest an­other “corked” op­er­a­tional per­for­mance from KWV and more ques­tions about Loub­ser’s abil­ity to se­cure sus­tained prof­itabil­ity for the busi­ness.

Dur­ing his rel­a­tively short ten­ure, Loub­ser had greatly sim­pli­fied the way the iconic KWV op­er­ated its var­i­ous busi­nesses. While Loub­ser cut through the in­ef­fi­cient cul­tural con­ven­tions that had hob­bled KWV for decades, the score­board shows it still doesn’t come close to match­ing its for­mer cor­po­rate cousin Dis­tell on any num­ber of per­for­mance mea­sures (most no­tably, costs).

Loub­ser was clearly a marked man. It’s doubt­ful he would’ve sur­vived much longer as CEO if Pi­o­neer’s buy­out at­tempt at KWV had suc­ceeded. Nor does Finweek be­lieve Loub­ser en­joyed the sup­port of for­mer an­chor share­holder Zeder/PSG, which had clearly ar­tic­u­lated a grow­ing im­pa­tience with the lack of op­er­a­tional progress at KWV dur­ing Pi­o­neer’s emo­tional bid­ding pe­riod.

Mar­ket watch­ers can­vassed by Finweek all agreed a dra­matic board­room shake up at KWV was a pre­req­ui­site to un­lock­ing its po­ten­tial. One noted: “KWV is, in essence, a small com­pany and share­hold­ers need to ap­point a CEO who will go in and get his hands dirty. Some­one needs to get a grip on this un­der­per­form­ing busi­ness and make some ag­gres­sive moves.”

If that’s true then any ef­fort by HCI – which has ap­pointed its own man, An­dré van Veen, as acting CEO – to drive ef­fi­cien­cies at KWV should be wel­comed by mi­nor­ity share­hold­ers. But will HCI have more suc­cess in ek­ing a de­cent re­turn out of KWV? We have to keep in mind for­mer an­chor share­holder PSG/Zeder (while ul­ti­mately mak­ing a good re­turn on its in­vest­ment) couldn’t in­duce a sus­tained spell of mean­ing­ful prof­its at KWV.

If any­thing, HCI’s re­cent suc­cesses at cloth­ing and tex­tile con­glom­er­ate Seardel should re­in­force no­tions the R11bn em­pow­er­ment group can gut out tough op­er­a­tional sit­u­a­tions and cope with board­room pol­i­tics. And there’s one thing to be thank­ful for: cash flush KWV, un­like Seardel, has a sturdy bal­ance sheet and has less im­pos­ing op­er­a­tional chal­lenges.

Still, though the spec­tre of hor­ri­ble yearend re­sults for KWV (and, let’s face it, global liquor mar­kets are sapped out and the stronger rand won’t help ex­port rev­enues) might worry mi­nori­ties, Finweek wouldn’t


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