Distell reports 64% profit drop after virus booze ban
By Emma Rumney
JOHANNESBURG – South Africa’s Distell on Thursday suspended dividends as full-year profit fell 64% following restrictions on alcohol sales in its home market as part of coronavirus-related curbs.
The company, which makes wines, spirits and ciders, had flagged an up to 80% drop in profit as a result of the curb, which ranged from an outright ban first introduced in March to restrictions around sales that are still in force.
“As part of measures introduced to improve the liquidity of the group... the board has taken the decision to temporarily suspend the payment of dividends,” Distell said in a statement.
Headline earnings per share, the main profit measure in South Africa, came in at 235.3 South African cents ($0.1395) for the year to June 30, compared with 652.9 cents a year earlier.
Distell also saw virus-led restrictions impact sales in markets like Botswana, further impaired the value of its stake in Angola’s Best Global Brands (BGB) Ltd, and wrote off a US dollar-denominated savings bond with Zimbabwe’s central bank.
The company had earlier written down the value of its BGB stake amid a weakening Angolan kwanza, and raised credit loss provisions against the bond, which it acquired during a critical shortage of foreign exchange in Zimbabwe.
This meant African Distillers Ltd (Afdis), a company it supplies to in Zimbabwe and in which it owns an indirect interest, could not settle its trading debt.
Distell accepted payment from Afdis in the local currency and invested the proceeds in the bond with the Reserve Bank of Zimbabwe in hopes of getting dollars out of the country.