Tiger Brands share price falls on concerns of management culture
By 10.31am the share had slid to R198.56, but closed the day at R201.31.
Three industry analysts polled on reasons for the share price decline yesterday indicated that the problem was not so much Doyle’s appointment, but the failure to change the management culture at Tiger, in spite of intense criticism by stakeholders and investors in recent years.
Doyle left Tiger in 2008 as financial director after he and more than 20 colleagues were found to have fixed bread prices and milling costs, in a cartel with competitors.
The group paid a R100 million fine. He was re-appointed as chief operating officer in 2012, and became chief financial office in 2016.
Tiger’s management also faced claims of reacting callously to the listeriosis outbreak in 2017 that claimed 216 lives.
The government traced the source of disease to Tiger subsidiary Enterprise Foods’ facilities, and the group faces a class action from surviving families, which the group intends to fight.
“The share price reflects a belief that Tiger’s management could have done better with this new appointment.
"There are issues in the public domain relating to the past of the new chief executive, but management have been criticised heavily recently one would have thought they would have chosen a fresh face, with new ideas,” said one JSE analyst in the sector, who chose to remain anonymous.
Mike Davies, director at Kiagoda Consulting, said while Doyle might have learnt from past mistakes, the perception created was of a person that had left the company because of his involvement in price fixing, and who had now managed to rise to success in the very same company.
“We don’t know if the management culture that led to the bread price fixing scandal has changed,” he said, adding that this was also not evident in the management responses to the listeriosis outbreak
He said the issue of Doyle’s past had arisen when he was appointed chief financial officer a second time and investors should have ”sent a stronger message at the time” as it was more difficult to raise the same issue a second time around.
Tiger’s chairperson Khotso Mokhele said their board was “pleased to have appointed someone of Noel’s calibre” after what he described as “a rigorous and extensive search process”.
Rob Opie, a brand strategist, speaker and author, said while he knew little of Doyle except that he was a capable executive, the situation at Tiger was similar to Shoprite, where the financial director was appointed to the chief executive position.
“Pieter Engelbrecht (Shoprite’s chief executive) has his inner circle of people who advise him. It all depends on who Doyle picks in his inner circle, as what Tiger needs to do urgently is to address their culture,” said Opie.
Analysts, who once admired South Africa’s top food companies, became sceptical after the listeriosis disaster - it hurt all food companies listed on the JSE, said Opie.
“Once they get the culture and the strategy right, Tiger employees will find themselves re-energised and take the company back to its previous heights,” he said.