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DISTELL GROUP HOLDINGS LIMITED - Trading update for the six months ended 31 December 2021
2022/01/20 07:30:00Download PDF Stock report
Trading update for the six months ended 31 December 2021
Distell Group Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 2016/394974/06
JSE share code: DGH
ISIN: ZAE000248811
('Distell' or 'the Group' or 'the Company')
TRADING UPDATE FOR THE SIX MONTHS ENDED 31 DECEMBER 2021
The board and management of Distell wish to update shareholders and the market
on the Company’s business and performance ahead of its Annual General Meeting
for the financial year 2021, and the publication of its interim financial
results for the six months ended 31 December 2021 (‘current period’).
Trading conditions across the Group’s operating areas continue to be impacted
in various ways by the COVID-19 pandemic (‘the pandemic’). The group continues
to perform well despite having to contend with managing the challenges
associated with the pandemic, rising commodity cost pressures, global supply
chain disruptions, an increase in the cost of imported goods and glass
shortages in our domestic market caused by rampant demand for Savanna and core
spirits brands.
South Africa, our largest market by revenue, has seen the Government imposing
restrictions on the trading of alcoholic beverages, which saw a reduction of
the trading period by 25 days during the current period vs 38 days in the
previous 6 months ended 31 December 2020 (‘prior period’).
In addition, civil unrest in July in KwaZulu-Natal and parts of Gauteng caused
approximately R100 million in damages to one of our Distribution Centres (DC),
where the majority of the insurance claim has since covered the losses
incurred. The effect on sales was minimised and operations were quickly re-
instated and normalised within 6 weeks of the incident.
Notwithstanding these challenges, the Group’s agility and investments in route-
to-market (RTM) and optimisation of its production network have enabled it to
capture growth and productivity opportunities as it navigates the current
environment.
TRADING UPDATE
Group performance
• Group revenue for the current period increased by mid-teens alongside low-
teen volume expansion compared to the prior period.
• In South Africa, despite a reduced trading period, the business was able
to grow revenues in the low twenties alongside mid-teen volume growth.
Category performance continues to be driven by an exceptional premium
cider and RTD (‘ready-to-drink’) growth with a commendable performance
across multiple spirits brands.
• In the rest of Africa, excluding BLNE countries (Botswana, Lesotho,
Namibia and Eswatini), the Group recorded mid-single-digit revenue growth
alongside volumes growing in the low-teens compared to the prior period.
This was largely driven by Mozambique, Nigeria, Zambia and Tanzania as a
result of our accelerated RTM investments. Kenya posted a resilient
performance, particularly over the peak season, despite prolonged domestic
channel closures due to government-imposed restrictions for the majority
of the trading period, which account for 15% of domestic revenues.
• The Africa business, including BLNE countries saw revenues and volumes
increase by low and high-single digits respectively, driven by Botswana
losing almost a third of its trading period due to extended restrictions,
and stock supply issues in Namibia, which are being addressed and trading
has been normalised.
• The international business recorded a single-digit revenue decline due to
one of its largest revenue contributing regions, Taiwan, experiencing
COVID-19 related on-consumption channel closures for half of the trading
period. South African port disruptions in July 2021 also had a material
adverse effect on wine exports and performance in the period. Premium
spirits continue to perform strongly across key markets particularly with
single malt brands and Amarula. Momentum continues within the online
channel and the Global Travel Retail (GTR) market recovering due to
increased international travel. Volumes declined as planned, given the
cessation of sales of less profitable wine brands and the exit of the RTD
business.
The Group’s balance sheet remains strong with its overall net debt position
expected to be under R1 billion, aided by strong cash generation and trade
receivables collection ahead of expectations during the festive season.
Distell’s businesses across all its key markets, despite the challenging
environment, are performing well by capitalising on previous investments and
focused execution. We continue to pursue measured investment behind key markets
and brands to capture strategic growth opportunities.
The Group is confident in its ability to generate cash, the appeal of its
diverse portfolio of brands, superior customer execution, production
efficiencies resulting from past investments and sufficient liquidity headroom
to navigate any short-term challenges in the current environment.
We remain committed to protecting the lives of our staff, livelihoods within
our industry and to serving our customers efficiently while creating
shareholder value over the long term.
HEINEKEN INTERNATIONAL B.V. TRANSACTION
Shareholders are referred to the announcement released on the Stock Exchange
News Service (SENS) on Monday, 17 January 2022 in relation to the transaction
with Heineken International B.V., in that the scheme circular and accompanying
Newco prospectus were distributed to shareholders ahead of the scheme meeting
to be held on Tuesday, 15 February 2022. Further information and shareholder
documentation can be found on Distell’s investor relations website at
https://www.distell.co.za/Investor-Centre/heineken-deal-site/.
INVESTOR CONFERENCE CALL
The Group’s interim financial results for the six months ended 31 December 2021
will be released on SENS on or about 24 February 2022. Management will be
hosting a conference call after the release of the Group’s interim financial
results.
Participants are requested to register in advance by navigating to:
https://78449.themediaframe.com/links/distell220224.html
Any forecast or estimate financial information contained herein has not been
reviewed and reported on by the Group’s external auditors.
Stellenbosch
20 January 2022
Sponsor and Corporate Broker
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 20-01-2022 07:30:00
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