Brimstone FY HEPS up 4%

South African investment company Brimstone has set out on a strategic path to reduce its debt and enhance shareholder value. CEO Mustaq Brey sat down with CNBC Africa to discuss the company's motivation behind this new strategy and what the future holds for Brimstone. Brey highlighted the impact of persistently high interest rates during the COVID-19 period, which led the company to refocus on reducing debt. He mentioned that interest rates remained high, with no significant decreases expected in the short term. In response, Brimstone has started selling off non-core assets to reduce debt, with over R300 million already trimmed since the beginning of the year. The company aims to repay R600 million by December 2025, with a hope to achieve this target by the end of the current year. Brey emphasized the importance of right-sizing the balance sheet to reach a comfortable debt-to-asset ratio. The CEO outlined core assets including Sea Harvest, Oceana, FPG, and Obsidian, while also identifying non-core assets earmarked for potential sales. Brey expressed a desire to bring Brimstone's debt down to about one billion rand to achieve a 25 percent debt to asset ratio, which he believes will lead to a fairer return for shareholders. He highlighted the current 60 percent discount at which Brimstone is trading to its net asset value and expressed a focus on aligning the share price with the company's asset value. Looking ahead, Brey indicated a focus on the food business, which constitutes over 70 percent of Brimstone's holdings. The CEO underscored the impact of challenges faced by the South African economy, such as power shortages and port gridlock, on the company's operations. Issues like load shedding have led to increased costs and operational challenges for Brimstone, necessitating a strategic debt reduction approach to navigate uncertainties effectively. Brey called for government intervention to address these challenges and create a more conducive operating environment for businesses like Brimstone. He acknowledged some progress made by the government but stressed the need for faster and more impactful measures to improve the business landscape in South Africa. Brey's strategic plan for Brimstone underscores a commitment to financial discipline, debt reduction, and enhancing shareholder value amidst a challenging economic backdrop in South Africa.