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Distell Group reported a double-digit increase in earnings for the six months to December, even as sales volumes fell in SA.
Distell Group reported a double-digit increase in earnings for the six months to December, even as sales volumes fell in SA.

Nederburg maker Distell lifts earnings, even as sales fall


By Nick Hedley - Mar 4th, 13:08

Distell Group, which makes Nederburg wines and Klipdrift brandies, reported a double-digit increase in earnings for the six months to December, even as sales volumes fell in SA.

Headline earnings rose 12.1% to R1.3bn as revenues climbed 7.3% to R14.4bn. The company lifted its interim dividend by 5.5% to 174c a share.

In SA, comparable revenues increased 7.8%, despite a 2.1% decline in sales volumes as declining disposable income weighed on peak-season trading, the company said.

“As previously guided, the group took proactive pricing decisions in the period which had a positive effect on revenue.”

While most categories grew, brandy volumes declined as consumers “traded down to value offerings and to beer”.

The group’s other African markets recorded comparable revenue growth of 21.1%.

“Nigeria, Kenya, Zambia and Mozambique all recorded strong growth across all three categories as we continue to build our local production and route-to-market across the markets,” Distell said.

Sales volumes from outside Africa declined by 6.5%, mainly because of adverse trading conditions in Europe and North America, where the group has curtailed sales of lower-margin wines. But comparable revenues increased by 3.7%.

Meanwhile, Distell said it had secured “sufficient grape and wine supply” for the coming months, given that the 2019 harvest was not expected to be higher than the previous year.

“We will continue to defend and grow our South African business with a targeted annual 0.5% increase in market share across our portfolios,” the group said.

It would also expand local production and route-to-market platforms in selected African countries. “We anticipate further growth as we invest behind and leverage off opportunities in mainstream spirits and wine as well as cider and ready-to-drink products.”

Beyond Africa, Distell aimed to grow its premium spirits portfolio while also restructuring the wine portfolio.
Business Live 

Read more about: trading | nederburg wines | distell | business

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