Dramatic boardroom shake-up looming
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