Remgro CEO applauds state’s assistance

The government’s approach to business has picked up in the past three months, says Jannie Durand, CEO of Remgro, one of the largest companies listed on the JSE.

Durand, chair of Distell, which is 32% owned by Remgro, told Business Day after the annual general meeting of the alcohol beverage group that “for the first time” the department of trade & industry had agreed to co-operate with representatives of the sugar and poultry industries, which have been hit hard by increased international competition, rising input costs and sluggish local trading conditions.

Durand told shareholders that the government’s involvement was critical given the tens of thousands of jobs at risk in the two industries.

Remgro has exposure to both industries through its controlling stakes in Rainbow Chicken and TSB Sugar.

“We’ve now established working groups to address the challenges facing the sugar and poultry industries in this country,” Durand said.

His upbeat comment on the government was made in response to shareholder Anthony Clark who asked the Distell board if it had plans to develop operations in China.

Distell’s brands include Amarula, Klipdrift and Hunter’s Dry.

Distell CEO Richard Rushton described three factors about the Chinese market: access to the right partners was essential; SA has no distance advantage; and Australian drinks companies have made good inroads into the market because they have freetrade access.

“For that you need governments to sit down together,” said Rushton.

Durand did not believe the South African government was prepared to make that move at this stage.

Rushton told the meeting that Distell had achieved low singledigit volume declines in its first quarter to end-September, but thanks to price increases it was able to report a single-digit rise in revenue.

Durand and Rushton defended the group’s performance after shareholder Chris Logan pointed out that by most measures, Distell’s performance “has been in structural decline for at least a decade”.

Logan said return on equity, which had peaked at 21% in 2008, was now only 12%. Return on capital employed had also been declining since 2009 and cash-flow return on investment had peaked in 2007.