South Africa’s Distell half year earnings’ grow 12.1% to US$91.36

SOUTH AFRICA – Distell Group Limited, a South African wines and spirit producer, reported growth in its headline earnings by 12.2% to US$91.36 million during its six months to 31st December 2018 period.

Distell’s revenues also recorded improved performance climbing up 7.3% to US$1.01 billion despite a declining sales volumes in its South African market.

According to report by Business Report, the company revealed its South African business posted a 2.1% decline in sales volume which it attributed to diminishing disposable incomes on peak-season trading.

“As previously guided, the group took proactive pricing decisions in the period which had a positive effect on revenue,” the company said.

Distell said that most of its beverage categories: ready to drink, spirits and wines, posted significant growth, except for brandy whose volumes declined as consumers traded down to value offerings and to beer.

The Nederburg wines and Klipdrift brandies maker said that its other African markets including Nigeria and Kenya posted a double digit growth to 21.1%  

“Nigeria, Kenya, Zambia and Mozambique all recorded strong growth across all three categories as we continue to build our local production and route-to-market across the markets,” Distell said.

Despite recording a 3.7% growth in revenues for its business outside Africa, the group’s sales volumes in the markets declined by 6.5%.

This was attributed to adverse trading conditions in Europe and North America, where the group has curtailed sales of lower-margin wines.

Commenting on the results, Distell’s Group chief executive officer, Richard Rushton, said:

“We are pleased with the momentum and continued resilience of our business. Our results reflect the efficiency initiatives aimed at driving consistent market place execution and enhancing margins.

I’m particularly encouraged with the stellar performance of our Africa operations at a time when we are increasing investments in route-to-market capability and local production.”

Meanwhile, Distell said it had secured sufficient grape and wine supply for the coming months, owed to the projected decline in 2019’s grape production.

The group said that it is set to invest more in the African countries, expanding local production and route-to-market platforms in selected African countries.

“We anticipate further growth as we invest behind and leverage off opportunities in mainstream spirits and wine as well as cider and ready-to-drink products.”

Beyond Africa, Distell aimed to grow its premium spirits portfolio while also restructuring the wine portfolio.

The company lifted its interim dividend by 5.5% to 174c a share.

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