South African Breweries (SAB) have announced the cancellation of R2.5 billion investments earmarked for 2021, as it tries to navigate through uncertainty in a country battling against the second wave of Covid-19 infections, which has led to government banning the sale of alcohol.
The cancelled investments relate to upgrades at operating facilities, product innovation, operating systems, as well as the installation of new equipment at selected plants.
This now brings the brewer’s cancelled capital expenditure to a total of R5 billion since the alcohol ban was introduced earlier last year.
SAB’s vice-president of finance, Richard Rivett-Carnac, said this decision would impact profitability and number of jobs created by the companies that would have worked with SAB to execute the capital investment plans.
“Given the uncertain operating environment, the decision to reduce SAB’s capital expenditure and consequently its cash flow requirements, is a difficult decision to make at this time,” says Rivett-Carnac.
“Allowing off-premises trading with restricted trading days and hours, coupled with an earlier curfew, would have been an effective way to support the healthcare system and mitigate the rapid transmission of the virus, while still preserving livelihoods and keeping the economy open.”
Rivett-Carnac said that an outright ban on the sale of alcohol was an extreme measure that should be reconsidered by the government.
Last week, SAB announced that it would be approaching the courts to challenge the constitutionality of the National Coronavirus Command Council (NCCC) to ban the sale of alcohol.
It said the legal action was the last resort available in order to protect its employees, suppliers, customers, consumers, and all the livelihoods they support.