Distell media statement
Distell Group Holdings Limited (Distell), the South African-based global drinks company, today released its interim results for the 6 months ended 31 December 2018, declaring a gross cash dividend of 174c per share, up by 5.5% compared to the previous period.
Distell delivered solid revenue growth in all three categories (RTDs; Spirits and Wine) resulting in strong topline growth in 12 out of its 15 top brands.
The company grew its comparable domestic market revenue by 7.8% with sales volumes down by 2.1% in tough trading conditions with declining disposable income which impacted peak-season sales. As previously guided, key pricing decisions had a positive effect on revenue which translated into margin improvement.
African markets, outside South Africa, delivered exceptional comparable revenue growth of 21.1% on sales volumes which were up by 12.7%. Focus markets on the continent, outside the Southern African Customs Union (SACU), delivered excellent results with revenue and volume growth of 43% and 34.1% respectively, giving impetus to the company’s African growth ambitions.
International revenues increased by 3.7% as momentum built on a narrower and more profitable portfolio alongside lower volumes of 6.5% off the back of muted trading conditions in Europe and North America.
Commenting on the results, Distell’s Group CEO, Richard Rushton, said:
“We are pleased with the momentum and continued resilience of our business. Our results reflect the efficiency initiatives aimed at driving consistent market place execution and enhancing margins. I’m particularly encouraged with the stellar performance of our Africa operations at a time when we are increasing investments in route-to-market capability and local production.”
Comparable Group revenue grew by 9.1% to R14,4bn on constant volumes whilst Reported Revenue grew by 7.3%.
EBITDA grew by 5.7%. Normalised EBITDA, which excludes the impact of the impairments, the profit on sale of investments, the one-off losses in TDL in the prior year, retrenchment and Group restructuring costs, increased by 11,2%. Normalised EBITDA, excluding foreign currency translation movements, increased by 6.1%.
Headline earnings and headline earnings per share, including discontinued operations of the prior year, increased by 12.1% to R1.3bn and 570.7c respectively. Excluding the currency conversion movements, Distell’s retrenchment and restructuring costs and the TDL losses referred to above, headline earnings increased by 6.6%.
Total assets increased by 10.3% to R24.6bn.
Net cash generated from operating activities increased by 35.8% to R2.4bn. The Group remains in a strong financial position with low levels of gearing, which is demonstrated by a debt to debt-plus-equity ratio of 16.2% (2017: 24.5%) and a debt-to-equity ratio of 19.3% (2017: 32.5%) at the end of the reporting period.
The Group has secured sufficient grape and wine supply for the forthcoming cycle following early indications that this year’s harvest is not expected to produce an increase in volumes when compared to the previous year. The company is also maintaining its water management and reduction programme, especially in the Western Cape, and also extended it to its other operations, as part of a wider sustainability drive.
Thus far, the company had met and exceeded its environmental obligations, testimony of the importance it places on sustainability. The company also announced that R 20m in external funding had been secured for Apple and Grape farming on 340 hectares creating 200 jobs which is set to increase by June as a part of its ongoing efforts to transform its value chain.
“Looking ahead, we expect the current tough domestic environment to persist and economic growth to remain lacklustre. We are, however, confident that our consumer-centric approach and diversified portfolio of brands will enable us to capture growth opportunities”.
“Africa remains a priority region for us given the continent’s growth prospects and our ambition to be an African champion. The international business will benefit from more focus planned in premium spirits and wines as we also explore complementary M&A opportunities,” said Rushton.
Since embarking on a new strategic journey, Distell has introduced a number of important steps across its business, to ensure the company is responsive to market needs and geared to respond effectively, to the ever-changing global landscape.
Last week, Distell announced key changes to its executive team reaffirming its commitment to diversity and transformation and as part of efforts to strengthen execution across the company’s entire value chain. This is part of a broader organisation effort aimed at improving the agility, effectiveness and efficiency of the Group.
