Strong African momentum drives Distell’s growth
The group said the operations would be split into international spirits, exports, and premium wine through Libertas Vineyards and Estates.
It said sales in the operations declined 10.6 percent during the year to end June, with comparative revenue remaining constant, as it struggled in international markets.
The group said it would also keep a close eye on Nigeria, Ghana, Kenya and Mozambique in the next five years because these markets delivered exceptional growth during the period despite sluggish performance in the Southern African Customs Union (region).
The maker of Savanna and Hunters Dry ciders as well as spirits including Scottish Leader, Klipdrift and Amarula said all categories delivered overall double-digit volume and revenue growth.
It said currency devaluations and liquidity restrictions in Zimbabwe and Angola, however, forced it to impair about two-thirds of the value of its 26 percent investment in Best Global Brands Limited, with the majority of its operations in Angola, as well as recognise a credit loss provision of about 80 percent on its US dollar denominated savings bond with the Zimbabwe Reserve Bank.
“We remain confident in the Angola business, given that volumes and market share continue to improve since our original 26 percent acquisition as structural reforms take effect.
“We will also continue to support the African Distillers Limited team in Zimbabwe, in which we own a 31 percent indirect interest, throughout this period,” the group said.
The ready-to-drink category growth came from Hunters Dry and Savanna, while the spirits category growth was led by Kibao and Hunter’s Choice Whisky in Kenya.
Comparable operating costs rose by 10.9 percent.
“Our underlying operating costs, which exclude cost of goods sold and the costs referred to below, were well controlled and grew at only 2.9 percent,” Distell said.
It said the results included group retrenchment, restructuring and other one-off costs of R223.3 million.
The group reported a 12 percent rise in full-year earnings before interest, taxes, depreciation and amortisation, excluding one-time items.
It said that it raised its dividend by 7.1 percent as it cut costs which were largely completed by the end of the reporting period in order to optimise and improve its supply chain and a review of central support functions.
Distell shares rose 0.06 percent on the JSE on Wednesday to close at R130.28.