SA Breweries cans investment projects worth

SAB has announced plans to halt investment projects worth R5-billion due to Covid-19 lockdown.
Image: /Joshua Resnick

Beer producer South African Breweries has canned local capital investment projects worth R5bn over the next two years due to the lockdown that has seen the sale of alcohol being suspended.

The SAB said in a media statement on Monday it was cancelling a R2.5bn investment project that was planned for this year while also reviewing another R2.5bn investment planned for next year due to the consequences of the the 12-week-long alcohol ban.

The company said the first R2.5bn was scheduled investment that was earmarked as part of its annual capital and infrastructure upgrade programme for 2020.

"These funds were previously scheduled as part of its capital allocation programme for this financial year, while an additional R2.5bn planned expenditure for the next financial year remains under review.

"SAB’s vice-president of finance, Andrew Murray, said: “The cancelation of this planned expenditure is a direct consequence of having lost (as at August 3 2020) 12 full trading weeks, which effectively equates to some 30% of the SAB’s annual production.

"This decision is a result of the first, and current, suspension of alcohol sales which has led to significant operating uncertainty for ourselves, our partners, as well as colleagues in the industry, including participants in the entire value chain, and which impacts over one million livelihoods across the country”.

SAB's decision comes after its competitor Heineken SA also revealed at the weekend it was cancelling its planned R6-bn capital investment project.

The SAB said the planned investment projects included upgrades to operating facilities and systems, as well as the installation of new equipment at selected plants.

"This decision will also have an impact on the external supply chain companies that had been selected for these upgrades.

"It is forecast that the jobs lost across the entire industry as a result of the alcohol ban will soon reach 120,000 people and the tax lost from the first ban is sitting at over R12bn.

"Regardless of the decision to cancel capital expenditure, SAB will continue to implement measures that are having a meaningful impact on the health crisis and in support of South Africa’s much needed economic recovery," he said.