Stronger rand takes a swig of Distell’s profit
bdlive.co.za - Aug 31st 2017, 11:28
Wine and spirits group Distell posted a 15% fall in after-tax profit on revenue up 3.7% in the year to end-June, hit by the stronger rand and impairments.
It kept its dividend unchanged from last year.
Headline earnings per share (HEPS) fell 3.7% to 708.3c, as headline earnings fell 3.6% — but with the currency effects stripped out, it would have risen 7.4%, Distell said.
The company wrote down R315.3m on investments in Bisquit cognac, a British wine broker and the industrial property rights held by its Angolan subsidiary.
The final dividend of 214c per share was unchanged from the previous year, for a total dividend for the year of 379c per share, also unchanged.
Its cash position improved, to R302.9m, from R102.4m a year ago.
SA accounted for R16.5bn of total revenue of R22.3bn, with Botswana, Lesotho, Namibia and Swaziland contributing R1.8bn, rest of Africa R1bn, Europe R1.3bn and the rest of the world R1.5bn.
Sales volumes were constant, but in SA rose 1.5% — with a 5.4% increase in the second half. Slower growth in wine sales was offset by faster growth in spirits and a recovery in cider and ready-to-drink products.
SA experienced a recession during the year under review.
In other African markets, where economies were hit by falling commodity prices, sales fell 5.2%, while a better performance in non-African international markets — where volumes grew 3.6% — was undermined by currency translations, and revenue fell 12%. This was compounded by the fallout of Brexit in the UK, Distell said.
Overall, foreign currency translation losses were R65.6m, against a R125.3m gain in 2016.
Looking ahead, the company expects difficulties to persist. "Global economic growth remains muted while African GDP growth is still being impacted by low commodity prices," it said.
"On the domestic front, recessionary circumstances continue to put additional pressure on consumers."
"Exchange rates continue to be volatile."
"A modest recovery in economic growth can only be expected in the latter half of next year."
At 9.30am on the JSE Liquor group, Distell was down 2.75% to R138.09.© BusinessLIVE MMXVII
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