Distell is in better spirits

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Distell is in better spirits

Published Date: 2020-07-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

Distell is in better spirits

The drinks group will report a decline in full-year earnings but says its financial health has been boosted by the easing of alcohol restrictions.

Distell says its financial health has taken a turn for the better since restrictions on the exports and the ban on alcohol sales were lifted this month. The move has also improved its ability to project jobs.

In a trading update ahead of the end of its financial year, the drinks group said the resumption of trading, cash generation since the lockdown moved to Level 3 and its proactive approach to prudently protecting its balance sheet had positioned it to manage the short-term challenges facing the business. Still, Covid-19 and the lockdown have taken their toll on earnings. Despite an initial spike in demand as restrictions were eased, volumes for the year fell by a quarter, resulting in an 18.3% reduction in revenue. It expects to report a decline of between 45% and 65% in basic earnings per share (EPS), while headline EPS are likely to be 60% to 80% lower.

Operations in Botswana, Lesotho, Namibia and eSwatini (Swaziland) were also impacted by specific country bans on alcohol sales but its Africa business outside the region had proved resilient, led by Kenya Wine Agencies which recorded a 2.3% increase in comparative revenues. Its international Spirits business proved buoyant, with increased volumes and revenues.

The group said it had donated 176,500 litres of sanitiser to government, NGOs, taverns and their customers to support good hygiene and responsible trading in vulnerable communities. It also generated a total of R21 million in revenues from the sales of ethanol and sanitiser since the lockdown. It closed five of its distribution sites this month after recording a total of 58 Covid-19 infections across its SA operations. All sites had since been deep cleaned and reopened and were operating at expected levels.

Distell said it would announce the results of asset sales of two of its premium wine farms when it releases its results on 27 August.

Its shares rose 0.7% to R76.30 yesterday.





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