Trade Tatler
“You're only given a little spark of madness. You mustn’t lose it.”
Robin Williams


THIS ISSUE:     20 May - 26 May

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Woolworths  Get yourselves something nice

Woolies has recently splashed out R25.4million on a bunch of its own shares in order to give them back to four hardworking people who have really made a difference, viz finance director Norman Thomson who received shares valued at R3.15 million, Zyda Rylands, managing director of the food unit, who was awarded stock worth 9.35 million rand, company secretary Cherrie Lowe who got shares worth 2.22 million rand, and Mr Susman himself, who was granted stock worth 10.73 million rand. The stock was granted under a three-year performance agreement, the conditions of which were fulfilled by all the executives in question. Susman sold shares worth 4.31 million rand on the same day they were acquired by the company, while Thomson sold stock for 1.26 million rand and Lowe disposed of shares valued at 893,431 rand.
Comment: A tasteful gift, of the sort you would expect from The Dapper One.

Bloomberg 23/05/11

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Pick n Pay  Will you, won’t you…

While we’re sitting here waiting for the Competition Tribunal decision, idly casting about for something to do, let’s engage in a bit of irresponsible speculation about the next Big Deal. Tesco has been doing the rounds, having a word with Sir James over at Shoprite, and a quiet chat with the young Duke of Ackerman at PnP. But there’s nothing in it, insist those worthies. Gareth Ackerman just happens to sit on the board of the global Consumer Goods Forum as do people from Tesco, and this will necessarily involve them speaking from time to time, in the normal course of their duties. Should a deal of some description be on the cards, Kantar Retail believes PnP will be playing the role of Cinderella come glass-slipper time. They believe the Big Blue is the most appropriate business partner for Tesco in terms of store formats, private labels, loyalty marketing, trading style, positioning and potential synergy.
Comment: Another such deal would certainly intensify the competition in the upper echelons of the industry, ahem.

Tatler Reporter 25/05/11

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Poultry  The Farmyard Connection

Rainbow Chicken and second-biggest rooster in the yard Astral published their interim results last week, and the general picture is of flat sales due to cheap imports and reduced consumer demand in still-straitened economic conditions. For the rest, let’s see how they stack up below:

Turnover % Increase YOY Operating Profit % Increase YOY
Rainbow R6.9billion 0% R534million 2.8%
Astral R4.2billion -2% R375million 23%

Astral attributes its superior performance vis-à-vis operating profit to improved efficiencies and the declining costs of feed and maize for the period.
Comment: As always, a tough old bird of a sector, made more gamy yet by the ongoing strength of the dear old ZAR.

Business Day 17/05/11, 24/05/11

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Pioneer Foods  Crumbs!

Pioneer Food’s interims are also out, and looking as comforting and solid as a freshly baked loaf of white bread. Group revenue was up 4% to R8.3billion, with volumes up 6% and prices down 2% for the six months to March. Last year’s run-in with the competition authorities still takes its toll, however. While operating profit before items of a capital nature was up 54% to R658million, they are 15% down on this if you take into account provision made in the period for a sizeable chunk of the R350bar Pioneer has put aside to pay its fine. And revenue from specified bread and wheaten flour products were also impacted negatively by delays in price increases specified by the Commission.
Comment: Probably best if it doesn’t accept invites to the Big Bread and Flour Guys Golf Day and Friendly Chat this year, then. 23/05/11

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SABMiller  The big money

This year, SABMiller will be paying out a whacking R39.3million in dividends to the tavern owners who participated in its Zenzele BEE transaction. If you’re a little guy, this means that your investment of the scheme of R100 would be paying you out a handsome R600, a year after you coughed up. The initial share issue of R19.2million, or 3.5% of SABMiller stock was made a year ago to nearly 30,000 taverners, with another 3.4 going to 9,416 qualifying staff in the SAB Zenzele trust. The scheme has been widely hailed by BBEEE pundits in its failure to enrich the usual suspects.
Comment: It’s a tidy little feedback loop: shares for the guys who buy most of your stuff, thereby improving the value of their shares.

City Press 22/05/11

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Adcock Ingram  Chemical brothers

Wrapping up those interims, Adcock Ingram has grown turnover 14% to R2.2billions to March, despite reduced earnings from ARVs and the suspension of some of its painkillers from the shelves. This pleasing growth is substantially due to the acquisition of Ayrton Drug Company in Ghana and as well as distribution and co-promotion agreements with MSD, Lilly, Roche and Novartis – stripping those out, sales growth was 1%, and operating profit up 1% to R526million. Volumes, more happily, were up 2%, despite Adcock being awarded only 4% of the government’s ARV tender. West Africa remains a focus area after the success of Ghana, with Adcock eyeing (as it were) other acquisitions, in countries like Nigeria.
Comment: We realise “countries like Nigeria” is something of a contradiction in terms, obviously.

Bloomberg 24/05/11, Sapa 24/05/11

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Inflation  The return of the return of the son of …

What the bleeding heck is going on with inflation? CPI for April was just 4.2%, compared with 4.1% in March and behind the predicted 4.4%. Yet Mrs Punter and her husband Joe are telling us that the cost of living is going through the roof. Part of the problem is that the big ticket items, when it comes to increases – like petrol and electricity – are soaring, yet together with food they account for just 20% of the basket inspected for CPI. In 2005, when the economy was booming and when the basket was defined, people were buying cars and hi-fi’s like there wasn’t a crippling recession around the corner, and it seems faintly ludicrous now that items like that should receive the weight they currently do.
Comment: And there is the small matter of food inflation here declining slightly, rather than spiking as it is in the developed world. Confusing.

Business Day 19/05/11

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KWV  An amusing little year which should keep nicely

Hosken Consolidated Investment (HCI)’s intentions toward KWV are becoming slightly more apparent as they poise themselves to snaffle up another 0.05% of the shares, for a total of 35% which would trigger a mandatory offer to minority shareholders, and putting HCI’s hotshot management team in a position to do a turnaround number on the troubled vintner.

Finweek 19/05/11

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Parmalat  Sacre Bleu!

French dairy giant Lactalis has launched a takeover bid on iconic Italian dairy business Parmalat, in the face of stiff opposition from Parmalat’s board. Lactalis already own 29% of Parmalat, and the acquisition would see the creation of the world’s biggest dairy company.

AFP 23/05/11

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