DURBAN - DISTELL'S share price leapt by more than 7 percent on the JSE yesterday after the group, the maker of Amarula, Savanna and Hunter's Dry, reported a favourable trading update for the six months to end of December despite the negative impact of Covid-19.
The group expects its headline earnings per share (Heps) to increase by between 8.6 percent and 13.8 percent, to be between 595.5 cents a share and 623c, up from 546c reported a year earlier while its earnings per share (Eps) was expected to increase by between 13.1 percent and 18.1 percent, to be between 622.5c and 650c, up from 550.3c compared to last year.
Africa’s leading producer and marketer of wines, spirits, ciders and other ready-to-drink beverages said its revenue increased by 3.8 percent during this period, with a volume expansion of 0.8 percent, even though it lost 41 trading days due to the alcohol ban in South Africa.
Its South African revenue was up by just 1.4 percent but this was offset by a strong performance from international operations which increased revenue by 15.4 percent.
In the rest of Africa, excluding Botswana, Lesotho, Namibia and Eswatini (BLNE) countries, the company reported revenues and volumes of about 20 percent compared to last year, largely driven by Kenya with 17 percent revenue growth and 9.8 percent volume growth), Mozambique’s revenue was up 33.3 percent with a volume growth of 15 percent and Nigeria’s revenue inched-up by 22.9 percent while volume was up by 20.3 percent.
The group said its African business, including BLNE countries, increased revenue by 12.7 percent, supported by an 11.7 percent growth in volumes, driven by a recovery in trading following the easing of border closures, and no further bans on alcohol sales.
“Trading conditions across the group’s operating areas continue to be impacted in various ways as governments deal with the challenges of the Covid-19 pandemic. South Africa, our largest market by revenue, has seen the government imposing further restrictions on the trading of alcoholic beverages, reducing the trading period by 22 percent,” the group said.
However, the South African government allowed the sale of alcohol as from Tuesday after more than a month of trading restrictions on alcohol.
Distell said despite these challenges, its agility and previous investments in route-to-market and optimisation of its production network, particularly in markets outside of South Africa, had enabled it to capture growth and productivity opportunities.
The group added that other markets in Africa and international countries, which it operated in, and exported to, still had active off-consumption channels while international travel restrictions had adversely affected the global travel retail market.
The share price responded positively to the trading update as it climbed to R104.99 per share, up from Tuesday’s closing price of R97.80.