EABL has signaled that it could sell more of its idle assets to fund its capital-intensive investments. The company has in the past six years sold off several idle properties 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. 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 percent 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.
East Africa breweries limited has reported an 11% drop in its profit after tax in its half-year end of year trading results. The fall in profits which now stands at five billion shillings due to a prolonged electioneering period and excise tax on one of her key brands -senator keg. Despite the drop in profits, the firm’s net sales hit 36 billion shillings with innovation paying off on some of its new products such as tusker cider and tusker lite.