Distell reports 12.8% revenue growth

26 August, 2014
Richard Rushton, MD

Distell, Africa's largest producer of wines, spirits, ciders and RTDs, has reported 12.8% growth in revenue and a 3.1% increase in sales volume for the year to June 2014. 

The South African-based group’s headline earnings rose 40.4% to R1.5bn as operating profit grew 22.9% to R2.2bn. With the inclusion of Burn Stewart Distillers – acquired in April 2013 – normalised headline earnings and operating profit grew 1.7% and 8.1% respectively.

Distell managing director Richard Rushton said year-on-year revenue rose 12.8% to R17.7bn “in a climate of persistently tough trading conditions at home and in many of its international markets.

“Both domestic and international markets have contributed to the revenue increase, which had also been impacted to an extent by the weaker rand and the incorporation of the BSD Scotch whisky business,” said Rushton.

International sales volumes, including Africa, rose by 4.5% while revenue improved 34.2%. In South Africa, Distell maintained its 21% value share of the total liquor market - domestic revenue increasing by 5.2% and sales volumes by 2.6%. Sub-Saharan African markets, outside South Africa, contributed 49.6% to foreign revenue.

Distell said the performance of the spirits category had been hampered by the ongoing decline in South Africa's brandy market, but insisted encouraging headway had been made in refocusing Distell's own brandy offerings.

Rushton said the impact of the drop in brandy sales had been countered to some extent by healthy sales of the Bisquit cognac range, as well as the growth delivered by local whisky brands Bain's Cape Mountain Whisky and Three Ships, demonstrating the demand for top-quality whiskies of South African provenance.

Distell said it maintained its volume share of South Africa's natural wine category and its leadership of the country's sparkling wine segment.

Operating costs increased by 12.7% to R15.7bn, trading profit increased 13.8% to R20bn and trading margins improved from 11.1% to 11.2%.

In 2014/15, Rushton said the company was expecting a modest improvement in trading conditions led by the recovery in advanced economies, which was driving emerging economy exports.

"We are confident of unlocking real value for all our stakeholders with our strong, diverse and appealing brands," Rushton said.

In May, Lucas Verwey stepped down as non-executive director, joining the executive management team.

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