30 Oct 23 Tiger Brands’ new CEO has a lot on his plate
Tjaart Kruger will have to reposition in the consumer foods market to catch up with nimbler rivals…
Noel Doyle is stepping down after less than three years as CEO and will be replaced by Tjaart Kruger, the former boss of Premier Foods. The market cheered the news, sending the shares skyrocketing almost 20%.
The swift appointment of a new CEO is a commendable effort of succession planning, comments a BusinessDay editorial. But what does this change mean for the company and its shareholders? Is it a sign of a deeper problem or an opportunity for a fresh start?
Doyle’s tenure was overshadowed by a reputation-sapping, financially crippling listeriosis outbreak and the company’s under-performance both operationally and in the stock market. He took the helm in February 2020, just before the Covid-19 pandemic wrecking ball hit the economy and consumer wallets, and triggered a corporate scramble for cash.
Under his watch, Tiger Brands sales grew from almost R29bn to R34bn, but very little of that flowed to the bottom line, with operating income remaining stagnant at just more than R3bn. It sold off some of its businesses to sharpen its focus on its mainstay food and drinks business. It also embarked on a punishing restructuring plan to reduce costs and improve efficiency.
Still, these measures did not seem to be enough to turn around the fortunes of the company. In its latest interim results for the six months ended March 31 2023, Tiger Brands reported a 16% increase in revenue but a 9% drop in operating income.
Its operating margins declined to 7% from almost 9% in 2022, due to high input cost inflation and incremental energy costs. It flagged almost no growth in headline earnings per share, the most widely watched measure of performance, for the 2023 full year.
Doyle did not have to say the company’s performance was disappointing and that it needed to do more to restore its profitability and competitiveness; it was evident in the numbers.
In response, the company launched an effort to capture the vast, cash-flush spaza shop market with its chief customer officer, Luigi Ferrini, advocating that it saw “exponential room for growth in this segment”.
But Doyle will not get a chance to see his plans through. His resignation came as a surprise to many analysts and investors, who speculated that he may have been pushed out by the board or lost confidence in his ability to lead the company.
Successor with a strong reputation
Kruger, on the other hand, is seen as a capable leader who can bring a new perspective and energy to Tiger Brands. He has extensive experience in the food industry, having served as the CEO of Premier Foods from 2011 to 2021. Shareholders will be keen to see how Kruger will reposition the company in the consumer foods market — where it has lost ground to nimbler rivals such AVI, Libstar and Pepsico — and boost a share price that has plummeted more than 60% since its peak in 2017.
Kruger has been appointed as CEO for just 26 months. Tiger stated the appointment would “accelerate the execution of the company’s strategy and value creation for shareholders”. It’s quite possible Tiger can extend Kruger’s tenure, but the group has made it clear that it is already planning for succession.
Kruger has a tough task ahead of him. He can capitalise on the opportunities presented by changing consumer preferences and trends, such as health and wellness, convenience and sustainability.
Tiger Brands needs a new recipe for success. Kruger may be the right chef to cook it up.