SAB cancels R2.5 billion of R5 billion investment plan

SAB VP of finance Andrew Murray: Cancellation is a direct consequence of losing 12 trading weeks.

The South African Breweries (SAB) has cancelled R2.5 billion of its R5 billion investment plan that was previously scheduled as part of its capital allocation programme for this financial year. The additional R2.5 billion planned for the next financial year still remains under review.

“The cancellation of this planned expenditure is a direct consequence of having lost 12 full trading weeks, which effectively equates to some 30 percent of the SAB’s annual production,” SAB vice president of finance Andrew Murray said in a statement. 

He explains that this decision is a result of the first, and current, suspension of alcohol sales which has led to significant operating uncertainty for SAB, its 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.

The investments that were being considered included upgrades to operating facilities and systems, as well as the installation of new equipment at selected plants. The brewery warned that its decision will also have an impact on the external supply chain companies that had been selected for these upgrades. 

“As SAB we are focused on our priority of ensuring the well-being and safety of our employees and all members of our communities, and this commitment will remain intact for as long as possible,” Andrew said. “We will continue our attempts at engaging with the South African government to obtain some form of clarity on when we can resume operations.”

Regardless of the decision to cancel capital expenditure, SAB said it 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.