Andre de Ruyter: between Nampak and a hard place

Nampak’s annual financial results this week are set to attract more than the usual interest. The packaging group’s results, the last to be presented by outgoing CEO Andre de Ruyter, come just a day before Eskom releases its interim results on Thursday — the last before De Ruyter takes office as Eskom CEO in January. His last Nampak outing will be important for at least two reasons. It gives him a chance to show if he’s the kind of CEO we want at a power utility that is as troubled, and as critical to SA’s fortunes, as Eskom. Nampak’s share price, now R7.37, is barely a fifth of what it was when De Ruyter took over in April 2014. The company has been plagued by troubles in its African operations and weak demand and fierce competition in its home market. De Ruyter inherited many of the problems, but it’s not clear whether he failed to effect a turnaround — or succeeded in making the best of a bad legacy.

The other reason is that Nampak’s results give De Ruyter a chance to talk — something he has reportedly been barred from doing as Eskom CEO-designate. He is, by all accounts, an excellent communicator, something sorely missing at Eskom. One might have thought that the government, having gone out on a limb to appoint a seasoned, private-sector executive, should have wanted to parade him. It could have boosted confidence and answered critics. But not Pravin Gordhan. The public enterprises minister and his department seem to be doing their best to control the levers of communication around Eskom.

One of De Ruyter’s biggest challenges will be to ensure he has political backing. As it is, the manner of his appointment has raised questions about why he was chosen, apparently a last-minute decision, and why De Ruyter’s name had never featured before. That the surprise

November 18 department of public enterprises announcement of his appointment contained fully half a page of details about the appointment process didn’t help, eliciting comments of the “methinks he doth protest too much” variety. Nor did the fact that the only justification given for the choice was that “Mr De Ruyter is an accomplished CEO with deep and wide experiences in creating and managing highly performing businesses”.

There has been, inevitably, a fever of speculation about what went down and what this might say about our politics. Did former Nampak chair and current finance minister Tito Mboweni have anything to do with it, for example?

In a way, it doesn’t matter what the process was, and whose name was or wasn’t leaked — except to the extent that if no-one in the energy space or the market knew about him, it raises questions about how much “due diligence” he did on Eskom, whether he consulted people for insights and information, and how well he understands the full horror of the task. Eskom and the country cannot afford another CEO who walks in, says “I had no idea how bad it was” and walks out a year or so later.

Even if Nampak were the “high-performing business” the department describes, running Nampak, with a R24bn balance sheet and fewer than 6,000 employees, is not like running Eskom, with its R760bn balance sheet, 46,000 employees, operational and financial crises and impossible political and regulatory environment. The compelling part of De Ruyter’s CV is his operating and executive committee experience at Sasol — the only private-sector company in SA that comes close to Eskom in scale and complexity.

Ultimately, he has two tasks at Eskom: one is to keep the lights on; the other is to ensure it’s a going concern. SA’s economic prospects depend on how he tackles these. How and why he was appointed won’t matter once he gets to work. We all need him to succeed.

Two tasks: keep lights on (and) ensure Eskom is a going concern