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Distell posts strong South Africa results

Published:  31 August, 2016

African wine and spirits conglomerate, The Distell Group, delivered solid results for the year to June 30, demonstrating its continued momentum in South Africa and growth in key offshore markets.

The company is also continuing its focused investment programme to further strengthen skills, structures and routes to market for sustainable long-term growth.

For the 12 months, the company showed strong top-line expansion in volume and revenue to deliver double-digit profit growth of 12.3% to R1.6bn.

In its South African market, Distell once again delivered robust results with revenue increasing 12.1% to R15.4 billion on volume growth of 8.8% during a period of contraction in the economy and pressure on consumer spending.

"In South Africa, we have improved our marketing and sales capabilities by expanding our national footprint and deepening our market penetration to access 36,000 outlets nationwide and, in the process, have achieved growth across all our market categories," said Richard Rushton, Distell's group managing director.

"Our cider brands continue to flourish whilst our wine portfolio has significantly outperformed the growing domestic market. We are also starting to see encouraging early signs of renewed brandy volume growth. Cognac, Scottish and locally-produced whiskies continue to record strong gains.

"Although global geo-political and economic risks have increased and competition has intensified, we are well placed to expand into growth markets outside Southern Africa."

Ciders continued to drive RTD performance with innovation contributing to the momentum.

Distell's wine portfolio, buoyed by 4th Street, was a top performer and surpassed the total industry volume growth rate of 9% by recording a 13.9% rise in volumes for the year.

On the African continent, Distell achieved strong growth in Botswana, Lesotho, Namibia and Swaziland (BLNS)) while in its other key African markets - Mozambique, Zambia, Nigeria and Kenya - the company also posted strong revenue growth.

Angola, Distell's other key market in Africa, was severely affected by the impact of the commodity slump and its associated impact on consumer spending.

The country was particularly hard hit by the fall in the price of oil, its single biggest revenue earner.

As a result, Distell total revenue in the rest of Africa beyond South Africa and the BLNS countries, declined by 3.2% with a 14.9% drop in volumes.

Internationally, revenues rose by 13.1%, aided by the weaker rand and improved product mix.

Volumes dropped by 12.5% due to the major UK wine retailers' rationalisation of wine stocks, together with Distell's decision to exit third-party contract volumes of wines and spirits.

The sharp slowdown of the Russian and Brazilian economies also affected trading. However, in line with Distell's focus on key brands and product mix, all major brands delivered pleasing top-line growth.

Financial highlights:

  • · Revenue increased by 9.6% to R21.5bn
  • · Sales volumes of beverages grew by 2.8%
  • · EBITDA up by 12.8% to R2.8bn·
  • · HEPS increased by 12.1% to 735.3 cents