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FOOD & BEVERAGE: Brimstone¬ís growing appetite

 



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CAPE Town-based empowerment company, Brimstone Investment Corporation, is building a formidable niche in the food sector, with its latest financial report showing that its edible assets now comprise a chunky 43% of the company’s R3,6bn intrinsic value.

Brimstone’s food court hosts a 16,38% stake in diversified fishing group Oceana (worth almost R1bn,) a 58% stake in hake fishing venture Sea Harvest (worth R450m) and a strategic stake in fast food franchisor Taste Holdings (worth some R93m.) The company also holds rights to a small BEE stake in food bands giant Tiger Brands, worth some R220m.

At this point, the operational angle for Brimstone lies in Sea Harvest, where it holds full control. Sea Harvest does interact with other investments – for instance supplying hake to Taste Holdings’ fast growing Fish & Chips venture.

One could presume that Brimstone’s longer term plans would involve building a more diversified food offering around Sea Harvest. This could be by acquisitions of new food brands, or by brand extensions of Sea Harvest’s frozen food offering.

Some observers have punted Brimstone as a consolidating influence in the fishing sector since it has steadily increased its exposure to Oceana.

But this (quite plausible) theory was rocked last month when Tiger Brands – which is the largest shareholder in Oceana – increased its stake in the fishing company to 41%. Prior to that development, market-watchers wondered whether Tiger Brands (which exited Sea Harvest several years ago) might not mull the sale of its stake in Oceana.

There no doubt Brimstone would relish the chance of increasing its stake in Oceana. But if Tiger Brands has a renewed appetite for fishing then Brimstone is likely to remain on board as the lead empowerment partner.

Having said that, Oceana would probably also appreciate having Brimstone as a bigger shareholder as this development would considerably enhance its BEE credentials, which are of paramount importance in the highly politicised fishing sector.

Brimstone’s next move in the fishing sector will then be keenly anticipated.

In the meantime Brimstone can take comfort in Oceana’s sterling contribution to its fortunes. Brimstone’s latest financials show the company received R60,5m in dividends.

Sea Harvest’s performance has not been too shabby either.

Despite Brimstone reporting overall catch rates down 20% and higher production costs sales were up 6,5% to over R1bn. Profits though were down 18,5% at R123m.

Sea Harvest, thanks to its strong frozen fish brands, has some traction. Brimstone chairman Fred Robertson reported that expansion in new export markets was proving successful. And he pointed out that the weaker exchange rate and recovering global demand should improve Sea Harvest’s performance going forward.


 
 
 
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