Nestlé announces R3,2bn capex to expand SA operations

Food manufacturer Nestlé South Africa would invest R3,2-billion in focused investment over the next five years to increase its competitiveness, outgoing chairperson and CEO Yves Manghardt announced on Wednesday.

The capital expenditure (capex) would be used to expand and upgrade its existing factories and distribution centres across South Africa, as well as on ensuring its environmental sustainability.

The company, which would now be led by former chairperson and CEO of Nestlé Malaysia, Sullivan O'Carroll, had already spent about R1,8-billion in capex projects in the past five years, said Manghardt.

Economic Development Deputy-Minister Gwen Mahlangu-Nkabinde said that it was encouraging to see Nestlé's continued investment in South Africa, especially given the global economic crisis, which led to the risk that some multinationals might want to dismantle their capacity and move their investments elsewhere in the world.

Meanwhile, Manghardt noted that Nestlé South Africa had made great strides in improving its transformation in the past few years, having gone from non-compliance to a level five black economic-empowerment contributor.

This was achieved, despite it not having scored any points on the scorecard in terms of ownership.

However, the food manufacturer was working on the issue of BEE ownership. It had previously identified one potential BEE partner, as part of the sale of an asset, but the deal did not go ahead.

It was working on a couple of options, which could in the next two to three years help the local company in making some progress in terms of BEE ownership, said Manghardt.

Nestlé South Africa was expecting to achieve double digit growth in sales of close to 15% and an overall turnover of R8,5-billion in the current year, he added.

O'Carroll, who started his career at Nestlé in 1973, would take over as CEO on October 1, when Mangardt takes up his new role as chairperson and CEO of Nestlé Middle East.

O'Carroll would be the first South African to lead the local arm of the group, since 1994. He was formerly the CEO of Nestlé Malaysia.


Edited by: Mariaan Webb