By Jackie Cameron
- The sector has already cut 118,000 jobs and projections show that a nine-week booze ban will cost another 84,000, says Richard Rushton CEO of Distell, which makes wines, spirits and ciders. South African Breweries said on Monday it was cancelling R5bn of planned investments as a result of revenue losses sustained during a near three-month ban on alcohol sales during the coronavirus crisis. “The South African drinks industry has been among the hardest hit by restrictions, which included a ban on the sale of alcohol to the end of May, which was reinstated last month to free up space in hospitals burdened by what officials said were avoidable alcohol-related injuries,” says Reuters. “The cancellation of this planned expenditure is a direct consequence of having lost 12 full trading weeks, which effectively equates to some 30% of SAB’s annual production,” SAB vice-president of finance Andrew Murray said.
- The alcohol prohibition has hammered Pick n Pay. The nationwide lockdown, coupled with President Ramaphosa’s ban on non-essential items, has hit the supermarket chain’s revenues. In addition to this, over 1,400 employees have the left the group, opting for its voluntary severance programme launched in March. You can read the full Pick n Pay trading statement on BizNews.com.
- State-owned Denel faces a liquidity crisis, with a court ordering it to pay workers outstanding salaries for May, June and July by Friday, Aug. 7, a copy of the court judgment showed. The case against Denel was brought by two trade unions, Solidarity and UASA, on behalf of their members after the weapons manufacturer did not pay salaries in full, says Bloomberg. Denel, which makes equipment ranging from armoured vehicles to missiles, has struggled to pay staff salaries amid a liquidity crisis aggravated by the Covid-19 pandemic. It is one of a number of struggling state enterprises the government has been keeping afloat with bailouts. Bloomberg notes that, as well as paying outstanding salaries, Denel will have to meet statutory obligations such as making payments to its employee pension fund, which it has also struggled to do recently. It was not immediately clear how Denel would pay, given severe cashflow constraints. “Denel and the state as shareholder have dealt recklessly with their employees,” Helgard Cronje, Solidarity’s defence sector coordinator, is quoted as saying. “This problem has not arisen as a result of Covid-19 but is the result of years of incompetent management and corruption.”
- Foreign investors continued to desert South Africa’s bond market in July, with their share of government debt falling to the lowest level in more than eight years, reports Bloomberg. But this isn’t all down to domestic challenges. BizNews partner the Wall Street Journal reports that the world’s biggest money managers are betting big on European bonds. It says they are counting on bond prices climbing in Europe’s weakest countries, even with yields already hovering near all-time lows. Fuelling the trend is the European Union’s planned issuance of €750bn in bonds to fund its recovery programme, according to S&P Global Market Intelligence. For more on that, see the story on BizNews Premium.
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