COMPANY COMMENT: AB InBev investors leery of change at the top

Investors didn’t seem very impressed with Anheuser-Busch InBev’s (AB InBev’s) change of leadership at its critical North American operation. The share price eased back in early trade on Tuesday following Monday’s announcement.

The appointment of Brazilian-born AB InBev veteran Michel Doukeris is reminiscent of SABMiller’s appointment of Norman Adami to head the recently acquired Miller operation back in 2003.

The SAB team was struggling to reverse the fortunes of the US number two player and turned to its own home-grown talent in the form of Adami to pull off an almost impossible challenge.

There are differences this time: Doukeris is replacing a long-serving veteran of the South American beer company that acquired its way to the global number one position, and the US problems are in large part linked to AB InBev’s management style. Analysts contend it relies too much on cost-cutting its way to profit growth.

Sales in the US, which is the largest profit pool in the global beer market, have been on the decline for four years, despite the purchase of 10 domestic craft breweries. The September quarterly results revealed a 6.2% drop in sales, which was almost entirely attributable to the weakness of AB InBev’s two most important brands, Budweiser and Bud Lite.

Group CEO Carlos Brito says Doukeris’s background in sales will help tackle the challenge. He adds that the critical North American business will focus on category expansion and category management, which he says are approaches learned from SABMiller.

The waters in the local fishing industry have started to look a tad choppier as the 2020 allocation of long-term fishing rights draws closer.

There has not been a flurry of activity yet, aside from unlisted Terrafin acquiring the Saldanha Group’s fishing interests and Premier Fishing snapping up squid specialist Talhado.

Of course, the big talk around the quays is whether a buyer will emerge for AVI’s fishing assets (I&J, Simplot and a large abalone farm), which have been put up for "review".

In the meantime, Bidvest Namibia — a subsidiary of JSE-listed Bidvest — has renewed a cautionary announcement around entering negotiations to sell its 100% interest in Bidvest Namibia Fisheries Holdings (BidFish), excluding certain (unspecified) assets.

BidFish is a sizeable operation spread across Namibian and Angolan waters, generating sales of more than R1bn from frozen horse mackerel, monkfish, sardines, canned pilchards, fishmeal, fish oil and oysters.

It is an interesting time for Bidvest Namibia to contemplate a sale of its fishing assets. BidFish endured a rough financial year to end-June 2017, with trading profits sinking to about R40m from almost R200m in the previous financial year.

Commentary in the Bidvest Namibia annual report noted despondently that low private sector quotas — most notably horse mackerel and sardines — had become enduring features of the market.

Vessels are operating at or below the profit line and directors noted pressure on profit margins mounting every year.

The initial suggestion was that BidFish’s vessels could be sold or laid up for a period.

Now it seems more drastic action must be taken. Presumably, a few South African fishing enterprises are mulling the price of such a decision.