Former SAB man to lead Tongaat

Tongaat Hulett has appointed former SAB-Miller executive John Gain Hudson as new CEO from February, it said on Monday.

Tongaat Hulett has appointed former SABMiller executive John Gain Hudson as new CEO from February, the agriculture group said on Monday.

The appointment of Hudson, who replaces former longserving CEO Peter Staude, could herald a shake-up in the underperforming sugar producer. In the past five years, Tongaat lost 57.27% of its value on the JSE, compared with the all-share index’s growth of 16.32%. In the matching period, the food producers index was up 13.62%. In the 2017/2018 financial year, Tiger Brands’ headline earnings plunged 37.2% to R617m.

Staude, at the helm of the group since 2002, retired in November 2018 as the group strategy to sell some of its prime land in KwaZulu-Natal appeared to hit a snag. The company attributed its fall in earnings in the six months ended September 30 2018 to the conclusion of fewer-than-expected land sales. In the six months, Tongaat suffered a headline loss of R87m, compared to R661m in 2017.

Tongaat said Hudson would lead the strategic review and direction of the group “to restore shareholder returns to acceptable levels, improve cash generation and reduce debt levels”.

It said Hudson was an accomplished business executive experienced in diverse and challenging markets in the alcoholic beverages industry.

Chris Logan of Opportune Investments applauded Tongaat on Monday for opting for someone without sugar industry experience. “They need to be dispassionate about sugar and judge it on its merits, notwithstanding their history as a sugar company”. Logan said Hudson had his work cut out for him.

Tongaat sugar mills were aged and needed a lot of maintenance. “They have sold most of the best pieces of land. I would also expect write-offs of Zimbabwe assets. There is the mountain of debt,” he said.

Tongaat was down 2.68% at R50.12 on Monday.