Sobering update from Distell


Sobering update from Distell

Published Date: 2020-05-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sobering update from Distell

The drinks company says earnings for the year to end-June will be significantly lower as a result of alcohol restrictions.

Distell says the government's ban on alcohol sales has already taken its toll on its profitability. However, the easing of export regulations since the lockdown moved to level 4 means it can now process and deliver open orders worth around R440 million.

In a trading update, the wine, spirits and alcoholic beverages group said it had offered the government pragmatic solutions to trade responsibly, aimed at avoiding dire consequences for the drinks industry without adding further risks to public health. As it stands, it said net profit for the 10 months to end-April was about 25% down on last year. For the year to end-June, it expected earnings per share (EPS) to be 45-65% lower and headline EPS to be 60-80% weaker.

Earnings could be further impacted by the timing of the easing of trading restrictions, potential credit loss provisions, impairments and the speed of export of products across its portfolio, amongst other factors.

Namibia, one of its large market aimed to relax restrictions from 2 June while Kenya Wine Agencies, another large revenue contributor, had delivered what it called a commendable performance in the midst of Kenyan government lockdown regulations.

Meanwhile, it has donated 105,000 litres of sanitizer to the government and NGOs while generating a further R8 million of revenue from the sales of alcohol and sanitizer to a range of businesses to support their own hygiene practices, as well as for resale. Support had been given to its small and more vulnerable customers and it said it had honoured a payment plan with its long-term suppliers in the wine-farming industry as the largest buyer of grapes for wine.

Distell's shares fell 0.1% to R78 on Friday.

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