Sat Jun 23 16:59:58 EAT 2012
Two Kenyan firms, CMA brace for change of guard next week
East African Breweris, Mumias Sugar, National Bank of Kenya and Capital Market Authority to get new CEOs
Two of Kenya’s listed firms and the Capital Market Authority will get new chief executive officers next week in the latest round of management changes, as investors look for clues over the companies’ profitability outlook.
Nairobi Securities Exchange listed Mumias Sugar and regional beer maker East African Breweries are to have new CEOs from July 1, as the firms seek fresh brains and strategies to drive growth in an uncertain year.
Peter Kebati, Mumias chief financial officer, is ascending to the CEO position as his predecessor Evans Kidero steps down to pursue political ambitions.
The outgoing EABL chief executive officer Seni Adetu, is poised to take up a new role at Guinness Nigeria, swapping positions with Devlin Hainsworth.
At National Bank (NBK), Ahmed Munir will replace Reuben Marambii on August 1.
Stella Kilonzo who has been at the helm of CMA for the past fouryears will vacate office for her successor on Monday next week.
The management changes come at a time when dark clouds, brought about by high interest rates and uncertainty of the global economy because of the crisis in the Eurozone, hang over the economies in the region, leaving companies seeking for strategies to grow their earnings and ring-fence their profitability.
Investors at the NSE and analysts said they were looking for clues on firm’s profitability as well as expectations, which could help push up depressed share prices.
A survey conducted in May by Deloitte showed chief financial officers in East African companies are worried about the financial health of their primary customers and suppliers and see it as one of the biggest risk in doing business.
Threatened corporate profits are forcing company finance heads to make tough choices in re-engineering their strategies to reduce exposure to risks and appease shareholders with the forecast of a difficult year ahead in mind. This means the CEOs now have a tougher task of steering their boats in turbulent economic waters.
“For Mumias and NBK we are likely to see these CEOs taking on costs. Mumias was doing too many projects and was inefficient in most of them; increasing efficiency means cutting unnecessary costs. NBK’s cost to income ratio is relatively higher compared to its peers, so that will be a likely focus for Mr Munir,” Kuria Kamau, an analyst at Old Mutual Securities said.
For EABL, he adds, the challenge will be to ensure that it retains its majority of market share in the face of new competition from SABMiller’s Crown Beverages.
One of the main pointers analysts will be looking into will be whether the CEOs are able to build on the strategies of their predecessors, or they will adopt a new approach, with the board of director’s support.
Mumias will be looking to increase its sugar production and Mr Kebati will have to oversee possibly the acquisition of other rival millers to fend off increased competition.
Mr Hainsworth will not have to worry about making acquisitions. His main concern would be making sure the cash EABL has pumped into various investments in the region is earning a decent return. There is Serengeti Breweries, the Tanzanian Brewer, which EABL acquired a 51 per cent stake in 2009 to shepherd.
There are different pockets of investments such as the increased capacity in Uganda – EABL spent Ksh1.6 billion ($18.8 million) last year in doubling capacity at its Port Bell plant, which the CEO has to ensure they are achieving sufficient return on invested capital.
In an interview with The EastAfrican, Mr Adetu said he expects Mr Hainsworth to broadly stick to group strategy which was mostly driving the growth of premium brands such as Tusker, Bell and Serengeti Premium Lager.
At NBK, Mr Munir’s biggest challenge, analysts said, is to clearly define the bank’s strategy. Mr Marambii spent most of his time pulling back the bank from the brink of collapse.
Report by EMMANUEL WERE and PETERSON THIONG’O