Distell triples full year earnings, inches closer to finalizing Heineken deal

SOUTH AFRICA – South African producer and marketer of wine, cider and spirits company Distell, has bounced back to above pre-pandemic revenue levels despite COVID-19 related hitches.

The group’s revenue for the year ended June 2021, increased by 26.3% to R28.3 billion (US$1.9 billion) on 26.3% higher volumes compared to the previous year.

Compared to FY19, revenue has increased by 7.9% and despite a volume decline of 2.1%.

Distell, which houses brands such as Amarula, Savanna, Hunter’s Dry, Durbanville Hills and Nederburg, has reported a more than three-fold rise in its headline earnings per share of 227.1% to 769.6 cents compared with 235.3 cents a year earlier.

During the period under review, domestic revenues in its largest market increased by 29.4%, with volumes up by 28.7%.

This was achieved despite 20% of trading days being lost due to the second and third sale of alcohol bans introduced by the South African government.

“Our diverse product portfolio, with well-known brands, recent innovations and strong route-to-market in South Africa contributed to market share gains across all three categories,” indicated the company

This was further propelled by its adoption of digital Business-to-Business sales and e-commerce platforms as customers and consumers adapted purchasing preferences.

Meanwhile in the African markets, outside South Africa, revenue increased by 22.9% on 30.7% higher sales volumes.

In comparison to pre-covid times, its top line performance increased by 19.2% driven by 11.5% jump in volume.

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Volumes in BLNE countries (Botswana, Lesotho, Namibia and Eswatini), also impacted by various lockdowns, grew by 22.2%.

Focus markets on the continent, outside the Southern African Customs Union, grew revenue by 22.4%.

“Our operations in Nigeria, Ghana, Mozambique and Zambia continued to perform well. The team surpassed its target of growing its overall Africa customer base to 48 000,” stated Distell.

Excellent growth was achieved across all three categories, driven by ciders and RTDs growing revenue by 65.0%, alongside key spirits and mainstream wine brands.

The Africa region contributed 63.6% to foreign revenue, with its contribution to group revenue comprising 17.2% in the period.

Looking at performance in the international markets outside Africa, revenue grew by 10.0% alongside an expected volume decline of 10.8%, attributable to the cessation of sales of non-core wine brands, bulk whisky and the exit from the RTD business.

Despite the remarkable bottom-line performance, Distell indicated it had held the dividend payout pending the outcome of its takeover talks with Heineken, the world’s second-largest brewer.

However, in the event that discussions were terminated, “the board intends to declare a dividend in respect of the financial year ended June 30, 2021. Although discussions have progressed, there is no certainty that the remaining aspects will be successfully resolved and agreed.

“The board believes it will be able to provide more detailed information to shareholders on the potential transaction before the end of Q3 (third quarter) 2021, “it said.

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