DURBAN – The ban on alcohol sales and distribution took its toll on the country’s biggest wine, spirits and ciders maker Distell, felling its profits 18.2 percent and volumes 25 percent in the year to June.
Distell said on Thursday that the alcohol restrictions that formed part of the government’s strategy to curb the spread of Covid-19 reduced the trading year by nearly 20 percent.
The group said it lost approximately 100 million litres in sales volumes and R4.3 billion in revenue. Its excise duty contribution was down by 11.3 percent to R6.3bn.
Distell said that overall revenue fell 14.6 percent to R22.4bn on 22.5 percent lower volumes.
In African markets, outside South Africa, revenue declined 3 percent on lower sales volumes which were down by 14.7 percent, mainly as a result of a 19.1 percent decline in volumes in Botswana, Lesotho, Namibia and eSwatini.
Volumes in international markets outside Africa eased 13.1 percent and revenue was down 8.8 percent.
The group said headline earnings and headline earnings per share decreased 63.9 percent to R516.8m and 64 percent respectively to 235.3 cents.
It said it decided to temporarily suspend the payment of dividends to improve the liquidity of the group following the impact of Covid-19.
Chief executive Richard Rushton said the resilience of their business was severely tested during the pandemic.
“We acted fast in strengthening our balance sheet and placed the well-being and safety of our staff, key suppliers and customers first.
“Rather than cut jobs, we took a painful but necessary decision to reduce salaries, starting with our executives and the Distell directorate.
“Our measured investments into key African markets have provided a resilient performance alongside our focused whisky portfolio in international markets,” Rushton said.
The group made provision for expected credit losses on trade and other receivables of R173.7m, increased its provision for obsolete and slow-moving inventory by R123.8m.
Other gains and losses include the impairment of R143.8m of its investment in Best Global Brands Limited (BGB) as well as R58.7m of its investment in the TD Spirits LLC joint venture in the US, which will be dissolved.
Citadel trader Jordan Weir said Distell experienced credit losses and impairments on some of its African businesses, which saw reasonably large impacts on sales figures owing to their respective lockdown restrictions.
“Distell’s Angola business, BGB, which focuses on whisky and cream products, saw impairments being made to its business for the second time in three years.
“It also wrote off a US dollar savings bond in relation to its investment in BGB and African Distillers in Zimbabwe, which was initially denominated in Zimbabwean dollars a few years back,” Weir said.
Distell shares closed 0.66 percent lower at R72.86 on the JSE on Thursday.
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