THE BOTTOM LINE
Sweet news indeed as Tongaat brings in a ‘non-sugar’ CEO
Central to the agri-processing company’s fortunes is its strategy to sell prime land in KwaZulu-Natal
Judging by the statement announcing John Gavin Hudson as the new CEO, there are changes in store at Tongaat Hulett – changes that those who have lamented the deterioration in the company’s fortunes have been clamouring for.
Key to the agri-processing company’s fortunes is its strategy to sell prime land in KwaZulu-Natal. Clearly the land sales are not proceeding as anticipated. In the six months ended September 30, Tongaat did not conclude any of the major transactions under negotiation. The land conversion and development programme is central to the company’s efforts to unlock value.
In its statement announcing Hudson’s appointment, Tongaat said the former SABMiller executive would lead the strategic review and direction of the company “in order to restore shareholder returns to acceptable levels, improve cash generation and reduce debt levels”.
For a company that has been extremely coy about its problems, that sentence is a mouthful. It confirms that the path the company is taking is set to change. Perhaps getting a “non-sugar” person was a deliberate move. There is a view that the company’s attachment to sugar production is holding back its progress.
Those who advocate for the company’s diversification away from sugar point to its vulnerability to imports, low international sugar prices and currency risks. Then there is talk that the company’s sugar mills are in urgent need of maintenance.