Beverage company Distell announced its half-year results to 31 December 2020, with revenues increasing just shy of 4% despite a 22% reduction in trading days for the group. This underpins the resilience and defensive nature of the industry, with many consumers stock piling ahead of fears of further government enforced alcohol prohibitions. The group managed to increase earnings by double-digits, outlining effective cost management given the single-digit increase in revenue. The group has had a tough start to 2021, with the alcohol ban in place for the lion’s share of January. To add to their woes, Tito Mboweni announced an 8% increase in alcohol and cigarette taxes effective immediately. The obstacles seem to keep mounting for Distell. Let’s see if they can keep avoiding these obstacles so astutely. – Justin Rowe-Roberts
Read also: Distell hydrates to beat Covid-19 hangover
Distell SENS statement:
Financial results – salient features
‐ Group revenue up 3.8% to R15.4bn on 0.8% higher volumes
‐ Flat domestic revenue performance driven by spirits and wine despite 22% reduction of trading days
‐ Robust Africa revenue growth of 19.9% outside BLNE
‐ Strong International performance with 15.4% revenue growth
‐ Excise duty increased by 7.1% to R4.4bn
EBITDA
‐ Reported up 11,2%
‐ Normalised and adjusted for forex up 16,8%
Headline earnings
‐ Reported up 11.5%
‐ Normalised and adjusted for forex up 24.0%
‐ Dividend payments remain suspended due to sale of alcohol ban uncertainty
Headline earnings per share increased by 11,6% to 612,0 cents (2019: 548,6 cents), and earnings per share by 16,1% to 639,0 cents (2019: 550,3 cents), in line with previous guidance given in the Company’s trading update and voluntary trading statement for the six months ended 31 December 2020 published on the Stock Exchange News Service (“SENS”) on 3 February 2021.
Dividends
The board remains confident in the long term strength and resilience of the business in spite of the current challenges being faced. Despite a marked improvement in the Group’s liquidity position, the board felt it prudent to not declare an interim dividend but to review its position at the end of the current financial year. The Group continues to protect liquidity as a priority given the ongoing impact of Covid‐19 and to mitigate against uncertainty related to the potential impact of any further sale of alcohol bans and restrictions.
