Finweek English Edition - - COMPANIES & INVESTMENTS - Bruce Whit­field brucew@fin­

1-year re­turn: 59,9%

The money quote: “... peo­ple who have sub­se­quently j oined me [at Fa­mous Brands] there from SAB can say we can smell a sniff of SAB here...” Grade: A- YOU MIGHT NOT be a par­tic­u­lar fan of Mugg & Bean’s new break­fast sausage but there are enough South Africans pre­pared to shell out hard earned cash to con­sume Fa­mous Brands fare for you to own the shares with­out set­ting foot over the thresh­old of any one of the group’s nearly 20 brands.

Fa­mous Brands has spent about R90m on ac­qui­si­tions this year. It is now a sub­stan­tial share­holder in Coega Dairy, which means it has a stake in its own cheese and long-life milk sup­plier while it is also now one of the coun­try’s big­gest cof­fee roast­ers since ac­quir­ing a 60% con­trol­ling stake in Java Lava. The strat­egy of own­ing the sup­ply chain and pro­duc­ing much of what its cus­tomers con­sume, it­self, is one of the key features of a com­pany that op­er­ates mul­ti­ple brands from a sin­gle plat­form.

Hed­der­wick’s success is un­der­pinned by the fact that the busi­ness has more than dou­bled rev­enues and earn­ings through the re­ces­sion­ary en­vi­ron­ment sparked by the 2008 fi­nan­cial cri­sis. Through a mix­ture of or­ganic growth and through strate­gic ac­qui­si­tions, rev­enues have more than dou­bled to over R2bn, prof­its have risen by the same quantum while div­i­dends have more than tripled to 200c. The share price has grown from 1624c in 2008 to cur­rent lev­els higher than 7000c.

The chink in the Fa­mous Brands ar­mour re­mains its fail­ure to break into the chicken busi­ness. By far the big­gest sin­gle QSR cat­e­gory in South Africa is chicken, dom­i­nated by KFC and Nando’s. If Hed­der­wick can crack that be­yond what’s a poor show­ing so far from Gi­ra­mundo – that will be the next shape-shift­ing move the group re­quires to keep it in the A-stream.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.