Johannesburg - Tiger Brands said CEO Peter Matlare will leave South Africa’s largest food producer after presiding over declining profit and a writedown in the value of the company’s Nigerian unit. The shares rose to a four-month high.
A search for a successor has begun, the Johannesburg-based maker of Tastic Rice and Jungle Oats said in a statement on Friday, without giving further details. The stock gained as much as 5.7 percent to R312.99, the highest since May 20, and traded 4.1 percent higher at 11:27 a.m. local time.
“Investors were very concerned over the decisions that have been made, especially in Nigeria, but also with the loss of market share in South Africa in certain key categories,” Sumil Seeraj, a Johannesburg-based analyst at Standard Bank Group, said by phone. “They were losing significant market share in bakeries. That opened up a space for competitors to move in and establish themselves.”
Matlare, who was CEO for more than seven years, oversaw the 2012 purchase of a majority stake in Dangote Flour Mills of Nigeria for about $152 million and the subsequent writedown of almost half that value. The food producer said earlier this year that the unprofitable unit may have to raise funds through a rights issue.
Tiger Brands profit fell in the six months through March as losses in Nigeria and profit manipulation in Kenya countered growth in its home market. Earnings per share excluding one-time items will probably fall by about 2 percent to 17.83 rand for the full year, according to the average estimate of 11 analysts surveyed by Bloomberg. The stock has declined 16 percent this year, valuing the company at 59 billion rand.
Competitors including Pioneer Foods Group are challenging Tiger Brands in the growth of South African bread sales, which account for about a third of the company’s revenue in its home market, according to statements from both producers. Pioneer shares have gained 36 percent in 2015.
BLOOMBERG