Distell prioritises growth and opportunities in Africa

DISTELL Group Holdings, the South African-based global drinks company, continues to prioritise growth and opportunities in Africa.

The African markets, outside South Africa, delivered revenue growth of 21.1 percent on sales volumes, which were up by 12.7 percent in the six months to end December.

However, the focus markets on the continent, outside the Southern African Customs Union, performed better by delivering revenue and volume growth of 43 and 34.1 percent respectively. The strong performance in Africa was led by Kenya, Mozambique and Zambia.

Overall the Africa region contributed 62.4 percent to foreign revenue and its contribution to group revenue rose to 15.6 percent during the period.

In international markets outside of Africa volumes declined by 6.5 percent, predominantly affected by trading conditions in Europe and North America where it has curtailed the sales of lower margin wines. However, comparable revenue increased by 3.7 percent as momentum built on a narrower and more profitable portfolio. “Volume and revenue growth in our spirits portfolio was led by excellent Scottish Leader growth in Taiwan and strong sales of single malts in all major markets. Wine volumes and revenue in the UK delivered excellent growth,” the group said.

Chief executive Richard Rushton said that the group was encouraged with the stellar performance of its Africa operations at a time when they are increasing investments in route-to-market capability and local production. “Africa remains a priority region for us, given the continent’s growth prospects and our ambition to be an African champion while the international business will benefit from more focus planned in premium spirits and wines as we also explore complementary merger and acquisitions opportunities,” Rushton said.

The African operations helped the group to report 9.1 percent growth in comparable group revenue to R14.4 billion on constant volumes while reported revenue increased by 7.3 percent, driven by growth in three categories which include ready-to-drink, spirits and wine. The group said this results in strong topline growth in 12 out of its 15 top brands.

Headline earnings including discontinued operations increased by 12.1 percent to R1.3bn, while headline earnings per share including discontinued operations also increased by 12.1 percent to 570.7 cents a share.

The group declared an interim dividend of 174c a share, up by 5.5 percent compared to last year’s 165c.

Going forward the group said in South Africa it has secured sufficient grape and wine supply for the forthcoming cycle following early indications that this year’s harvest will not produce an increase in volumes compared to the previous year. “The group is maintaining its water management and reduction programme, especially in the Western Cape, as it extends the programme nationally,” it said.

Distell shares closed 3.77 percent higher at R124.52 on the JSE on Friday.