South Africa: South African Breweries embarks on a restructuring process that could affect some 40 jobs

South African Breweries (SAB), the local unit of global brewing giant Anheuser-Busch InBev (AB InBev), has embarked on a retrenchment process at its local operations that could affect some 40 jobs, News24 reported on March 2.

In response to questions from News24, SAB confirmed on March 2 it had embarked on a restructuring process and had started consultations with affected employees, saying that only a "very small amount – less than 0.01%" of the group's 5 000 permanent South African jobs would be affected.

It also planned, where possible, to absorb affected staff into other areas of its business.

The company said the process followed it having reviewed its operating models across the business in line with its "continuous improvement processes and a dynamic environment globally".

"This review recommended changes to human resource allocations."

It said the process it had undertaken "adhered to both the spirit and letter of labour relations legislation" and that it was currently consulting with the affected employees.

Earlier on March 2, its parent AB InBev reported SAB had delivered record total-full-year volumes after its beer market share moved ahead of its pre-pandemic levels.

Explaining the strong performance, AB InBev said a "focused commercial investment" and consistently executing its strategy for increasing the brand power of its "beer and beyond beer portfolios" had helped drive the South African performance.

Top local brand Carling Black Label "grew by mid-teens," while AB InBev also flagged Flying Fish and Brutal Fruit as top local performers, with these alcohol brands all reporting double-digit revenue growth on a full-year basis.

But the fourth quarter of 2022 brought some headwinds for its South African operations due to production constraints at its Prospecton brewery, caused by floods in KwaZulu-Natal, which limited its ability to meet demand in the peak season.

Revenue grew by mid-single digits, while earnings before interest, tax, depreciation and amortisation (ebitda) declined by single digits in the quarter "due primarily to commodity cost headwinds".

At global level, the company reported revenue growth of 11.2%, while ebitda growth came in at the "top-end of our outlook", said AB InBev CEO Michel Doukeris in a statement.

However, Covid-19 restrictions in China, which is one of AB InBev's biggest markets, brought some pressure to bear in that that region.

The company said Covid-19 restrictions "significantly impacted the industry" in the fourth quarter, adding that its key regions and sales channels were "disproportionately impacted" resulting in a 6.9% total volume decline over that three month period. That segment's ebitda declined by 41.8%.

Vestact portfolio manager Michael Treherne said there was "still some Covid overhang" in AB InBev's results as "Chinese markets have only recently opened".

But he expected the reopening in China to be a "tailwind" for the group though he cautioned any recovery there could be "hampered by consumers trading down to cheaper beers".

And even though AB InBev reported that its gross debt had reduced by $US8.9 billion to $79.9 billion, resulting in net debt of $69.7 billion, Treherne said that AB InBev's debt levels were "still higher than management are comfortable with".

Nonetheless, he welcomed the reduction in the overall debt levels.

03 March, 2023