Tongaat apology fiasco: Analyst calls for Investec boycott for shaming one of their own

EDINBURGH — Investec analyst Anthony Geard raised his head above the parapet to call for the head of Tongaat CEO, Peter Staude, following yet another set of appalling financial results. Geard’s suggestion was a fair one. After all, Geard is assessing companies on behalf of investors in Tongaat and Staude has presided over a protected company that has turned in miserable figures for a decade. But, instead of resigning or acknowledging accountability in any meaningful way, Staude evidently got onto his mates in the Investec boardroom. The Investec marketing machinery was quick to pump out an apology to Staude. The Tongaat CEO may have been placated, but Investec’s action – which has had the result of shaming Geard – has sparked protest within South Africa’s investment industry. Analysts and fund managers have agreed with Geard that Staude must go, with some calling for institutional investors to punish Investec for not backing Geard. – Jackie Cameron

By Loni Prinsloo and Felix Njini

(Bloomberg) – Investec Ltd. apologised to the chief executive officer of South Africa’s biggest sugar producer after an analyst from its research unit said Peter Staude should resign because of the “appalling” financial results of the company.

Anthony Geard said in a note to clients that Tongaat Hulett Ltd. has had a decade of poor performance and after full year results that missed projections “we think its time for the CEO since 2002 to step aside.” The note was reported on earlier by Johannesburg’s Business Day newspaper.

Tongaat Hulett Ltd. Chief Executive Officer Peter Staude

“This is not the view of the Investec Group,” the Johannesburg-based bank’s spokeswoman Ursula Nobrega said by email. “To the extent to which it has caused embarrassment to Mr Peter Staude, with whom we have had a long and fruitful relationship, we apologize.”

Investec says CEO of South Africa’s Tongaat Hulett should resign

By Felix Njini and Loni Prinsloo

(Bloomberg) – Tongaat Hulett Ltd. Chief Executive Officer Peter Staude should resign, an Investec Ltd. analyst said this week, citing prolonged underperformance by South Africa’s biggest sugar producer.

The company reported “appalling” full-year results on Monday after saying in November it was poised for positive earnings and cash flow, analyst Anthony Geard said in a May 30 report seen by Bloomberg. Tongaat has had 10 years of negative cumulative free-cash flow and declining returns, he said.

“We think it is time for the CEO since 2002 to step aside,” Geard wrote.

Tongaat didn’t immediately respond to emailed questions and Investec said it could not immediately respond to queries. Geard declined to comment on the report. South Africa’s Business Day newspaper reported the news earlier.

Tongaat said May 28 it lowered its dividend 47 percent and reported a 37 percent decline in so-called headline earnings for the year. Operating profit fell 16 percent and net debt rose.

Tongaat’s results show a “painfully slow pace of unlocking value” from land sales after the company missed its targets on disposals, the analyst said. Tongaat said at the start of its financial year that it was in talks to sell 233 hectares (576 acres) but only sold 96 hectares, Geard said.

Tongaat declined 2.1 percent by 2:33 p.m. in Johannesburg, bringing this year’s drop to 31 percent.

“Management change and a higher reference price in SA to set import tariffs would be positive catalysts for the stock,” Geard said.

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