SOUTH AFRICA: Overhaul at OTK sees the exit of egg and red meat businesses
In a bid to refresh shareholder returns, the new vice-chairman Graham Ebedes said that the non-core business interests of the agricultural company would be shed and "avenues will be explored to allow maximum returns to shareholders while reducing OTK's risk of debt exposure."
In addition to restructuring the balance sheet to make available 600-700m rand, new director Jeff Wright commented, "the egg business is an exit. It is the first to get hit when the economy turns down." He continued: "We have a small red-meat business and we will exit that too because it is too small for us [valued at 27m rand]." The milling interests of the company are also subject to review since Wright revealed "we must either go big on this business or exit."
The performance of OTK's retail, poultry, grain and cotton operations is still proving satisfactory, and the company has expressed interest in expanding these sectors into the Free State Province. Wright explained: "We no longer want to be regional, we want to go national. The digital market place may well be on the cards." E-commerce will help to spread the influence of OTK's 51 retail stores.
Wright and Ebedes believe that OTK will improve on last year's operating profits and steady share earnings.
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