Weekend Argus (Sunday Edition)

Distell revenue up as sales volumes rise

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SOUTH African-based multinatio­nal brewing and beverage company Distell said on Friday that its revenue was up 9.3 percent in the six months ended December 31, mainly on the back of a 3.7 percent rise in volumes.

Distell said net cash generated from operating activities had increased 15.4 percent.

The company declared an interim dividend maintained of 165 cents per share, unchanged from the same period last year.

Headline earnings per share, however, decreased by 5.1 percent to 509.2 cents.

Domestic market revenue increased 8.2 percent while sales volumes were up 2.9 percent amid a suppressed consumer environmen­t and sustained competitor activity, Distell said.

African markets outside South Africa delivered revenue growth of 18.5 percent on sales volumes which were up 6.6 percent, largely driven by the inclusion of KWA Holdings EA Limited in Kenya, which was acquired in April 2017.

A few countries delivered mixed results as the moderate uplift from higher commodity prices had not fully flowed through to the underlying economies, coupled with changes in the company’s operating models.

Focus markets on the continent such as Namibia, Botswana, Kenya, Zambia and Zimbabwe all recorded strong growth. But overall performanc­e was negatively impacted by challengin­g trading conditions in Mozambique, Nigeria and a one-off negative impact from the group’s Tanzania Distilleri­es.

Volumes in internatio­nal markets beyond Africa grew by 6.7 percent, with revenue up 9.4 percent as the increased local investment in the UK was impacted by the effects of a stronger rand and a less favourable sales mix.

Distell said growth across advanced economies and most emerging markets pointed to a more favourable global economic outlook, although there were still risks facing the domestic economy in the short term.

“The recent strengthen­ing of the rand, higher grape prices and water shortages will have a negative impact on the business,” the company said.

“The group looks to defend and grow its market share through an optimised brand portfolio and innovation.

“It will look to continue and lead in the recovery of the brandy category and drive its wine strategy across the price continuum.”

It said that while the drought in the Western Cape posed a real risk to the supply of grapes and wine in the medium term, the company had secured sufficient supply for the current cycle and invested a total of R22 million in waste water treatment and reuse programmes to mitigate against further supply risk.

Distel shares declined 0.52 percent on the JSE on Friday to close at R137.50. – ANA

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