Distell says rest of Africa offset lower volumes in SA

Alcoholic drinks company Distell, whose brands include Nederburg wines and Klipdrift brandies, says its rest-of-Africa business made up for lower sales volumes in SA in the year to end-June.

While group revenue advanced, net profit for the year slumped 45.5% to R909.8m partly because of asset write-downs and credit-loss provisions in Angola and Zimbabwe.

But Distell said normalised headline earnings adjusted for foreign exchange movements and once-off items grew 7%. As a result, it raised its total dividend for the year by 7.1% to 423c a share.

The company said comparable domestic revenue increased by 9.5%, even as sales volumes declined 0.9%. Lower volumes came “as consumer confidence and disposable income remain subdued and with increased value offerings by competitors, particularly in beer”.

“The group took tactical pricing decisions in the period which had a positive effect on revenue and margins. The cider and ready-to-drink portfolio delivered double-digit revenue growth, with Savanna, Extreme and Bernini maintaining their excellent growth momentum as they stole share from beer.”

Distell said it aimed to “defend and grow” its South African business through market-share gains and “innovation”.

The rest-of-Africa business grew at a faster pace, with comparable revenue growth of 20% as sales volumes lifted 10.3%.

“Focus markets on the continent, outside the Southern African Customs Union, delivered excellent results”, with revenue up 40.6%.

All categories delivered overall double-digit volume and revenue growth, led by Nigeria, Kenya, Zambia, Ghana and Mozambique, Distell said. 

“Sub-Saharan Africa’s growth outlook affirms our strategic focus on this region,” the group said, adding that it wanted to accelerate its growth in certain markets.

Meanwhile, Distell plans to split its international operations into three business units: international spirits, exports, and premium wine through Libertas Vineyards and Estates.

“We believe this gives us the best opportunity to grow premium spirits and wines in key markets and drive brand premiumisation in line with consumer demand,” it said.

hedleyn@businesslive.co.za