Sedibeng to turn profitable in 2 to 3 years
According to an NBL report, the South African joint-venture DHN experienced an increase in overall volume. NBL continued to make positive returns from the South African business. Van der Westhuzein and Mouton were also confident that Sedibeng would be profitable within the next two to three years while at the same time awaiting regulatory approval from the South African Competition Commission which it expects to receive possibly in October this year. Approval had already been received from the Namibian Competition Commission.
Van der Westhuizen and Mouton did not provide much detail about NBL’s acquisition of a bigger stake in its joint-venture, DHN (Diageo Heineken Nambrew) after questions from analysts seeked detail on how NBL will finance its acquisition of Diageo’s stake. Diageo has exited the joint-venture leaving only NBL and Heineken as partners.
According to van der Westhuizen, Namibia Breweries exceeded all expectations, with the brewer well on its way to achieving all its objectives set for its future financial year 2019. “NBL exceeded all expectations despite increased competitor activities, market forecasts and volume migration to South Africa.”
A key consideration for NBL is its ability to mitigate the risk of water shortages and whether it would ultimately be forced to move all or part of its production elsewhere. Responded a positive van der Westhuizen, “[the issue of] moving is something you can not ignore.” Further to that Mouton stated that NBL was investigating various water saving options, while motivating that moving was perhaps not the most viable option financially to NBL. Mouton added, “NBL continues to focus on improvement projects.”
Van der Westhuizen further explained that Namibia Breweries Limited had in the past lobbied extensively to have water intensive industries set up away from the central areas.
The duo added that Namibia Breweries would shift some production to Sedibeng while shorter shifts eliminated the risk of potential job losses at the brewing plant stemming from the water shortage currently being experienced in the central area comprising significant parts of the Khomas region and Okahandja.
Upon questioning, Namibia Breweries Limited could not provide an explanation of what moving the brewing plant would entail, whether setting up a plant elsewhere in Namibia or moving production to Sedibeng.