East African Breweries Limited (EABL) last year sold the second piece of property in about one year helping boost its income, which has lately come under pressure from increased financing and operating costs.
It has emerged the brewer last year sold a piece of land in Thika on which Castle Brewing Ltd plant, formerly owned by rival South African Breweries (SAB), sits.
In late 2011, the company had sold a 32-acre parcel in Ruaraka on Thika Road to London-based private equity fund, Actis. The PE firm plans to build a multi-billion-shilling commercial and residential estate on the land.
“Following board approval, we sold a piece of land which was no longer of strategic importance to us,” said group corporate relations director Brenda Mbathi.
However, she declined to disclose the identity of the buyer and the value of the transaction of the Thika property. But sources privy to the deal say the land was sold to a local fruit juice manufacturer.
A bitter marketing war between EABL and SAB (later SABMiller) in 2002 saw the firms demarcate East Africa after a truce. EABL agreed to close Kibo Breweries in Moshi, Tanzania, while SAB shut down its Thika plant leading to a loss of 800 jobs.
SAB exited the Kenyan market with the swap deal leaving EABL with ownership of the piece of land and the equipment whose eventual use is unclear.
“As a business, we look at our asset base on a continual basis and we regularly review the strategic utilisation and values of non-core assets, including our property portfolio, and make decisions on that basis,” added Ms Mbathi.
SABMiller in 2010 took over Keringet, an up-market water bottler, but are yet to signal any major re-entry into the beer industry although they are marketing beer made by its Tanzania Breweries Ltd subsidiary.
A week ago, the brewer unveiled poor trading results indicating it was running a rough patch as it finances the takeover of Serengeti Breweries in Tanzania. This has seen its stock battered at the Nairobi Securities Exchange.
(Read: EABL market value drops by Sh16bn after profit fall)
In the meanwhile, EABL on Friday made a shock announcement that its chief executive officer, Devlin Hainsworth, was exiting the firm after only eight months in charge although insiders said there was no obvious link with the results.
EABL posted a 14.4 per cent drop in net profit to Sh3.75 billion for the six months to December last year compared to Sh4.38 billion during similar period in 2011.
The decline in profit was attributed to increased finance costs related to the Tanzanian acquisition and an increase in operating costs.
EABL announced that Mr Hainsworth, who took over from Seni Adetu on July 1 last year, would on March 31 leave Diageo entirely to be succeeded by Charles Ireland on April 1.
Mr Ireland was the managing director of Guinness Anchor Berhad in Malaysia, a joint venture between Diageo plc and Asia Pacific Breweries.
“Devlin Hainsworth will be leaving his position as group managing director of EABL as of March 31, 2013 in order to pursue other interests outside of EABL and Diageo,” said Charles Muthune, EABL chairman in a statement.
“All will be done to make sure the handover is seamless and that there is minimal disruption to the business,” said EABL.