Competition: Bowler Metcalf CE Friedel Sass said SoftBev incurred significant planned costs because of the ‘intensely competitive and sieged nature’ of the carbonated soft-drinks beverages industry in a difficult economy. Picture: HETTY ZANTMAN
Competition: Bowler Metcalf CE Friedel Sass said SoftBev incurred significant planned costs because of the ‘intensely competitive and sieged nature’ of the carbonated soft-drinks beverages industry in a difficult economy. Picture: HETTY ZANTMAN

Perennially profitable plastics packaging specialist Bowler Metcalf has hinted at selling its investment in loss-making soft-drink bottling associate SoftBev.

In a commentary accompanying year to end-June results released on Friday, Bowler CEO Friedel Sass said the management was "critically appraising its continued involvement in the beverages business".

Softbev was formed about two years ago with the merger of Bowler-controlled Quality Beverages and Softline.

SoftBev reported a R93m loss, prompting Bowler to take a sizeable pretax impairment on its 43% stake in the bottler of brands such as Jive and Cooee.

Market watchers have been urging Bowler to take action at SofBev, which is offsetting gains made by the core plastics packaging operations. In the year under review, the packaging segment increased revenue to R78m, from R55m in 2016, with operating margins improving markedly to 16%, from 11.5%.

Sass conceded SoftBev had been cause for much speculation, but argued that the company’s management needed space to steer a strategic and bold process of competitive positioning in a short period.

SoftBev incurred significant planned costs because of the "intensely competitive and sieged nature" of the carbonated soft drinks beverages industry in a difficult economy.

Sass contended the SoftBev teams had done well to consolidate operations and grow market share across the wide spectrum of brands.

A R100m capacity build in Gauteng had been completed with a Cape Town plant upgrade also finalised.

Sass said economies of scale for Gauteng had improved after the successful procurement of contract filling for a national retail brand and good growth in the licensed brands.

The SoftBev energy drink brand, Reboost, continued to show exceptional growth.

Opportune Investments CEO Chris Logan, a long-time Bowler shareholder, said the company’s stake in SoftBev was written down by 42%, from R280m in financial 2016, to R162m. Bowler also had to increase its loan to SoftBev, from R47m in financial 2016, to R79m.

Logan said it was most encouraging that Bowler stated that management was critically evaluating its continued involvement in the beverage business. Shareholders had to hope that an excellent evaluation is performed, he said. "Much like what transpired at KWV, significant value could be realised by an ownership/controlling shareholder change at SoftBev."

Thanks to the resurgent plastics packaging operations, Bowler hiked its dividend to 22.7c a share (18.4c a share).

A total R5.5m was spent on share buybacks.

Please sign in or register to comment.