South Africa’s Distell Group sees full-year revenue and profit rise amid volatile trading environment

South Africa’s leading wines, spirits and cider producer, Distell Group Ltd, said on Wednesday that full-year revenue for period ending 30 June 2016 rose 9.6% to R21.5bn rand ($1.46bn), helped by a deepening of market penetration in its home market where it now has access to 36,000 outlets across the country.

Distell which also makes ciders such as Savanna, Hunter gold, Hunter Dry, among others said that revenue in its home front climbed 12.1% to R15.4bn ($1.05bn) on a 9% volume lift during a period of contraction in the economy and pressure on consumer spending.

Distell derives 72% of its revenue in South Africa.

The company noted that its cider brands continue to grow, while its wine portfolio has significantly outperformed competitor brands. In addition, Distell says it is beginning to see early signs of renewed brandy volume growth. Cognac, Scottish and locally produced whiskies continue to record strong gains.

In the rest of Africa, the company said it recorded strong growth in Southern African Customs Union countries of Botswana, Lesotho, Namibia and Swaziland (BLNS) as well as in its other key African markets – Mozambique, Zambia, Nigeria and Kenya.

However, the growth was weighed by a slowdown in Angola, which historically accounts for 50% of the group’s sales on the continent. The impact of the fall in oil price and a weakened currency has resulted in reduced consumer spending. As a result, the company’s overall African revenue excluding South Africa and BLNS countries declined by 3.2%, with volumes falling 14.9%.

On other international front, the company reported a 13.2% rise in revenue, buoyed by a weaker rand and improved product mix. However, volumes declined in the UK due to retailer’s rationalization of wine stocks, along with the company’s decision to exit third-party contract volumes of wines and spirits.

In the USA, Distell said it has begun the process of fully integrating its export portfolio with Terlato Wine Group, a leading distributor in the country.

Similarly, in Asia, the company said it had gone into a joint-venture partnership with China Haisheng Juice Holdings Company Limited in order to bolster its presence in the country.

Distell’s net profit for the full-year rose 8% to R1.5bn rand ($102m), up from R1.4bn in the previous year.

Looking ahead, the company said the outlook for global economic growth remained subdued amid volatile trading conditions in many of its key markets. Given the slowdown in 2016, the company was expecting a modest recovery in the medium term in developed markets and emerging economies.

You may also like:

Leave a Reply

Your email address will not be published. Required fields are marked *