- Revenue declined by 14.6% to R22.4 billion (R26.2 billion: 2019)
- Headline EPS at 235.3 cents was 64% lower on prior year
- Flags impact of liquidity constraints in Zimbabwe on operations
South Africa based liquor group, Distell reported a fall in revenue and profit streams stemming from the impact of the restrictions imposed on the sale of alcohol as part of SA government’s strategy to curb the spread of Covid-19 virus as well as tough trading conditions in other markets including Zimbabwe.
The Group operates in Zimbabwe through African Distillers Ltd (Afdis) selling brands such as Amarula, Chamdor, Savanna, 4th Street, Klipdrift among others.
In an earnings report for the year ended 30 June 2020, Group CEO Richard Rushton said, “the Group lost approximately 100 million litres in sales volumes and R4.3 billion in revenue as a consequence of the lockdown restrictions that were imposed in various countries and in particular in its largest market, South Africa, to curb the spread of the COVID-19 virus”.
Group revenue declined by 14.6% to R22.4 billion (R26.2 billion: 2019) on 22.5% lower volumes while profit for the year declined by 55% to R394.6 million compared to R883.6 million recorded in the prior year.
Headline earnings per share, the main profit measure in South Africa, came in at 235.3 South African cents ($0.1395) for the year to June 30, compared with 652.9 cents a year earlier.
Revenues from its home market decreased by 18.2% while volumes declined by 25% as a result of the tough operating environment.
“Key gin and vodka brands performed well in a competitive environment in the period with spirits enjoying some growth after the first South African ban on liquor sales was lifted,” Rushton said.
In African markets, outside South Africa, revenue declined by 3% on lower sales volumes, which were down by 14.7%, mainly as a result of a 19.1% decline in volumes in BLNE countries (Botswana, Lesotho, Namibia and Eswatini).
“Trading conditions in Angola and Zimbabwe remained challenging with currency devaluations and liquidity restrictions amid tough economic conditions impacting on operating performance.
“As a result, the Group impaired an additional amount of R143.8 million of its 26% investment in BGB and also recognised a credit loss provision of R108.1 million to write down the full investment in the US dollar (USD) denominated savings bonds with the Zimbabwe Reserve Bank,” Rushton said.
Meanwhile, volumes in international markets outside Africa declined by 13.1% and revenue by 8.8%.
On the outlook, Rushton said “Looking ahead, we anticipate a tough domestic environment, with falling disposable income and increasing unemployment our key concerns”, but expressed confidence in the management of the business to shield the economic turbulences.
“Our more focused and diversified portfolio of brands along price points, occasions and innovation in response to consumer trends will enable us to position ourselves well for any recovery,” he said.
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