Distell sustains half-year revenue growth with 9% lift

Distell Group, a leading South African-based cider, spirits and wine producer with foot prints in several African countries including Nigeria and across the globe reported half-year revenue growth of 9.1% through the end of December. Revenue rose to R14.4bn rand (US$1bn) on -0.5% volumes.

In South Africa, revenue was up 7.4% on a negative 2.2% volume. The growth was led by a 10.6% sales boost in the spirit segment, particularly Gin and Vodka, with whisky recovering. Cider and RTD (ready-to-drink) performed strongly with revenue growing 7.6%, led by Savanna, Extreme and Bernini.

South Africa accounts for 74.5% of Distell’s revenue.

In African markets outside of South Africa, revenue was up 21.1% on a 12.7% higher volumes. Focus markets on the continent, outside the South African Customs Union (SACU), saw 43% revenue growth, helped by 34.1% volume rise. The company notes that Nigeria, Kenya, Zambia and Mozambique all recorded double-digit revenue growth across the three categories – cider, spirits and wine. Trading conditions in Zimbabwe and Angola remained challenging with currency devaluation and liquidity restrictions impacting on operating performance. BLNS countries (Botswana, Lesotho, Namibia and Swaziland) in SACU delivered low overall revenue growth. The Group said it invested $21.7 million in savings bonds of the Reserve Bank of Zimbabwe following severe currency restrictions that limited the ability of customers to repatriate funds to South Africa.

The African region contributed 62.4% to foreign revenue and 15.6% to total group revenue.

Outside of Africa, revenue grew 3.7%, with volume declining by 6.5%, predominantly impacted by trading conditions in Europe and America due to the scaling back of lower margin wines. Volume and revenue growth in the company’s Spirit’s portfolio was led by excellent Scottish Leader growth in Taiwan and strong sales of single malts in all major markets. Wine volumes and revenue in the UK delivered excellent growth.

Foreign currency translation losses which amounted to R51.4 million rand improved from the prior year’s R63.3 million rand.

The Group has recently announced further initiatives to optimise and improve the efficiencies of its supply chain. It is also reviewing central support functions throughout the group to align to new ways of working which support a change in culture, operating model efficiencies and decision making.

Total Group net profit attributable to equity holders of the company rose 4.3% to R1.25bn rand.

Looking forward to the second half, the company expects continued challenging macroeconomic conditions with rising costs and consumers under pressure in its home market. However, it will leverage its unique ability to compete across categories and price continuum, taste profiles and gender occasions. In the rest of Africa, it will continue trajectory by investing behind African platforms with local RTM in Angola, Nigeria and Kenya. It will begin construction of local production in Zambia and expand BGB presence. In the rest of the world, it will grow its premium spirits and wine portfolio through more focused international business. It will also optimize and build a self-sufficient supply chain.

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