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Distell battered by Covid-19 hangover

Distell has publicised shocking Covid lockdown Prohibition losses: about 100-million litres in sales and R4.3-billion in revenue – and this excludes the second ban on alcohol sales introduced in July to take pressure off hospitals.

Releasing results for the year to end-June, the drinks group said its performance over the past year was resilient despite the unprecedented challenges it faced due to Covid-19. Still, it has temporarily suspended dividends to improve its liquidity.

The group’s local spirits business recorded some growth after the lifting of the first prohibition of alcohol sales, with gin and vodka brands performing well in a competitive environment.

Wine sales were also impacted by restrictions although the category saw a resurgence in consumer purchases following the lifting of restrictions. Despite tough competition and discounting in the ready-to-drink market, Savanna continued its strong momentum against competitors.

Revenue from Africa outside SA fell 3% as sales volumes declined by 15%. That was due to a 19% decline in Southern African Customs Union (SACU) countries including Botswana, Lesotho, Namibia and eSwatini, where there were also some country-specific alcohol bans.

Volumes in other international markets declined by 13%, with revenue falling by 8.8%, due to the impact of export restrictions on Amarula and wine exports.

Group revenue fell 15% to R222.4 billion as volumes declined by 22.5% from a year earlier. Revenue from SA fell 18%, cushioned by growth in non-alcoholic beverages and innovations during restrictions.

Turnover from its African operations outside SACU rose 6.6%, while its international premium spirits business delivered a strong performance. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 23% and headline earnings per share came in 64% lower at 235.3c.

Over the period, Distell’s SA and International operations donated a total of 180,000 litres of sanitiser, along with its Kenyan operations donating 105,000 litres of ethanol, to local government, NGOs, taverns and customers in order to support the need for good hygiene practices and responsible trading in vulnerable communities.

Apart from donations, the group also generated a total of R24.5-million in revenue from the sales of ethanol and sanitiser.

Distell said the local market was expected to remain tough due to falling disposal income and rising unemployment. However, it said it was managing the business to remain flexible and recession proof and it remained in a strong financial position with comfortable levels of debt.

It said the industry was committed to promoting safe use of alcohol through harm reduction programmes and investments, and is working to make alcohol consumption safer as Prohibition is a blunt instrument.

Source: www.inceconnect.co.za

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