Sub-Saharan Africa helps lift Distell revenue by 15%
IOL Business - Aug 27th 2012, 11:27
Wine and spirits conglomerate Distell achieved strong results in the year to June, with 15 percent growth in revenue from the South African and export markets. It lifted revenue to R14.2 billion, helped by a favourable exchange rate.
But earnings were reduced by a once-off extraordinary excise duty amounting to R297.8 million as a result of the reclassification of wine aperitifs by the SA Revenue Service (Sars).
As a result of this, headline earnings that would otherwise have risen by 23.1 percent, rose by only 0.8 percent to R969.9m and operating profit was 1.7 percent lower than it would have been, at R1.41bn.
This was due to a Sars decision to charge the same duty for wine aperitifs as for those made from spirits, which have a higher alcohol content. This has been changed with effect from February 23, as a result of objections from both Distell and the SA Liquor Brandowners Association. Distell is now in discussion with the relevant authorities to backdate the reduction to the period before the higher duty was charged.
The final dividend is R1.52 a share, making the total dividend for the year R2.95, covered 1.6 times by headline earnings.
Capital expenditure totalled R500.1m, of which R157.9m was spent on the replacement of assets. A further R342.2m was spent on expanding capacity, mainly for the production of cider and ready-to-drink products.
Exports of these two products grew strongly in terms of both volume and revenue, mainly in Africa.
Managing director Jan Scannell said the company was on track to increase the contribution of exports to total revenue.
This had risen to 27.5 percent of the total, up from the 26.4 percent last year.
He said that, contrary to the views of some wine producers, the UK market could still provide good growth.
“We are now far better represented in the retail channel than ever before and continue to unlock the potential in this market.”
In the domestic market, Distell’s sales had grown by 9.6 percent in volume and 13.8 percent in revenue to R10.6bn. This compared with the 3 percent increase by volume and 8.2 percent in value for the country as a whole, according to AC Nielsen data.
Sales volumes in international markets had grown by 10.7 percent and revenue by 21.1 percent to R3.4bn. Sub-Saharan markets had contributed 60.8 percent to revenue from exports. The biggest increases in wine sales came from sub-Saharan Africa, South America and Asia.
“What is most pleasing, is that international volume growth was achieved across all important categories, with spirits sales growing by 13 percent and wine sales by 6 percent while ready-to-drink volumes increased by 19 percent.”
He said the sales of Bisquit cognac, produced by the company in France, grew by 5 percent in volume and 33 percent in revenue, “with exciting growth in developing markets in the East, eastern Europe and Latin America”.
Distell shares on the JSE closed 0.3 percent lower at R97.20 yesterday.
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