Lockdowns cost Distell R4.3bn in revenue
MULTINATIONAL brewing and beverage company Distell said yesterday it lost 100 million litres in sales volumes and R4.3 billion in revenue as a consequence of lockdown restrictions imposed in various countries – particularly in its largest market, South Africa – to curb the spread of the Covid-19 virus.
In its results for the year to the end of June, Distell said restrictions imposed on the sale of alcohol as a part of the government’s strategy to battle the coronavirus virus reduced its trading year by nearly 20 percent.
The adverse impact on the group was mitigated by liquidity, cash flow protection and the resilience of Distell’s strong balance sheet.
“Management has taken proactive steps to focus its portfolio choices and associated key investments, while also putting stringent cost and capex (capital expenditure) controls in place to protect the sustainability of the business,” it said.
“At the same time, the safety and well-being of employees will continue to be prioritised, along with key investments in innovation and digital capabilities, so that the group is well positioned for a recovery.”
The group deferred more than R300 million of capital expenditure, while limiting all discretionary spending, and decided on a “painful but necessary” salary reduction of between 10 percent and 12.5 percent from September 1 for all South African-based employees.
In African markets outside South Africa, revenue declined 3 percent, again on lower sales, with volumes in Botswana, Lesotho, Namibia and Eswatini down 19.1 percent.
Focus markets on the continent outside the Southern African Customs Union, however, grew revenue 6.6 percent, underscoring Distell’s strategic aim to expand operations in this region.
“Our Nigerian, Angolan, Kenyan and Mozambican expansion investments yielded comparable revenue growth of 21.2 percent on higher sales volumes of 1.7 percent,” the company said.
Trading conditions in Angola and Zimbabwe remained challenging, with currency devaluations and liquidity restrictions amid tough economic conditions impacting operating performance.
Volumes in international markets outside Africa declined 13.1 percent and revenue fell 8.8 percent.
Distell said the prohibition of alcohol sales in South Africa, from March 27 until last week, with a temporary break in-between, did not take into account how other countries applied their Covid-19 measures to balance the need to protect citizens’ health while protecting livelihoods, jobs and the industry’s economic contribution.
“We will work with the South African government in order to ensure the effective enforcement of the current regulations, while at the same time working collectively to chart the new landscape for alcohol,” it said.