East African Breweries Limited Group Managing Director Andrew Cowan. PHOTO | salaton njau
EABLhas signalled that it could sell more of its idle assets to fund its capital-intensive investments.
EABL
has in the past six years sold off several idle property including its
glass-making subsidiary Central Glass Industries, a distribution
warehouse, the former Castle Breweries plant, its Ruaraka headquarters
and tens of acres of land.
Over the period, the brewer
said it invested over Sh30 billion to increase manufacturing capacity
and improve efficiency and flexibility of its production lines.
On
Friday the brewer revealed that it had booked a Sh700 million gain in
the six months to December from the sale of a disused brewery and a
prime piece of land in Mombasa.
“Every financial year we spend at least Sh5 billion in capital
expenditure. “The decision was made to partly fund these significant
expenditures by selling off the idle assets the business owns,” said
Andrew Cowan, EABL’s managing director.
The Mombasa
property, a brewery the firm used to operate before relocating to
Ruaraka in Nairobi, sits on a six-acre piece of land in Mombasa’s
Shimanzi Industrial Area.
The transaction price was Sh800 million.
The transaction price was Sh800 million.
EABL
booked a significant gain on the sale since the carrying amount in its
books was low, boosting its half-year performance in which net profit
dipped 11.3 per cent to Sh4.95 billion. The business has already spent
Sh5 billion in the half year to December.
The ongoing
Sh15 billion Senator Keg plant in Kisumu has consumed Sh2 billion, while
another Sh243 million has gone into installing a new spirits line in
Ruaraka to meet increased demand.
EABL has also spent
Sh436 million to increase it Senator Keg packaging capacity in its main
factory, with another Sh179 million going into new tanks meant to boost
brewing capacity and quality.
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