| Wed 18 Feb 2009, 13:02 | | DST - Distell Stares Down Tough Times To Post Sound Growth |
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DST
DST
DST - Distell Stares Down Tough Times To Post Sound Growth
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN: ZAE000028668
("Distell" or "the company")
DISTELL STARES DOWN TOUGH TIMES TO POST SOUND GROWTH
The agility provided by a basket of exceptional brands with strong consumer
franchise offering real value for money across the pricing continuum,
representation in a range of markets worldwide and an even better performance
from operating units throughout the business, all helped Distell to deliver
impressive growth under harsh trading conditions.
At a time when many of its international competitors are reporting losses,
Distell was able to raise revenue by 21,6% to R6,1 bn on a sales volume increase
of 15,9%, for the six months to December 31, 2008.
Headline earnings grew 19,9% to R650,2m, while headline earnings per share
improved by 19,3%.
A dividend of 124 cents per share has been declared, an increase of 19,2 % on
the previous year`s interim payment of 104 cents per share.
Trading income rose by 21,3%, thanks largely to continued revenue growth. Net
operating margin remained virtually unchanged at 15,7%.
Distell MD, Jan Scannell reported that domestic sales volumes had increased by
10,7%, and revenue by 14,8%. Growth had been powered mainly by the rising
popularity of the company`s cider and RTD (ready-to-drink) brands which
continued to build market share. However, the spirits market had remained under
pressure and although the company had been able to increase its share of this
category, its volumes had declined slightly.
Scannell was pleased by Distell`s profitable wine volume growth. "By protecting
brand equity in a highly price-sensitive market as opposed to chasing volumes,
we still succeeded in expanding sales."
The capacity to respond flexibly to changed trading conditions abroad, saw
Distell lift international sales volumes in all off-shore markets by 37,1%, with
revenue up by 54,3%. While spirits had shown satisfactory growth, the increase
in wine sales volumes had outpaced the 23% rise in South African industry
bottled wine exports for the comparable period. "We achieved very encouraging
growth in wine export volumes in Europe and Africa. Asia Pacific is now also
assuming greater significance."
Africa, in particular, delivered exceptional growth across the portfolio, to
contribute 54,0% to foreign revenue.
He stressed that benefits derived from improved throughput and efficiencies had
been largely offset by steep increases in material costs and distribution
expenses. This was further compounded by the additional investment required to
expand sales and marketing representation in important markets.
Cash retained from operating activities amounted to R462,4m.
Total assets increased 10,5% to R7,1bn.
Capital expenditure amounted to R102,9m, of which R48,6m had been spent on the
replacement of assets and the remaining R54,3m on the expansion of the company`s
cider, wine and spirit production capacity.
Investment in net working capital had increased 19,6% to R2,8bn, comparing
favourably to an increase of 21,3% in trading income.
He said the company remained in a strong financial position, as shown by the
positive cash and cash equivalent balance of R344,4m at the end of the reporting
period.
Scannell emphasised that South Africa`s economy and its consumers were
continuing to adjust to the unfavourable impact of a highly troubled global
economy and a moderation in real disposable income. "Moreover, the
deterioration in the global economy is expected to continue with major economies
now in recession and it is unlikely that we shall see an early end to these
depressed conditions.
"Even though we anticipate that global trading conditions should become
increasingly difficult, we do believe we are appropriately structured to compete
effectively under these circumstances. Our portfolio gives us the flexibility to
adjust to changes in consumer spending and to capture opportunities in key
established and newer markets. A broad network of trading alliances across a
diversity of markets, some less adversely affected by the global credit crunch
than others, should also provide us with a measure of resilience."
He added that while it was extremely difficult to make any forecasts under the
current volatile conditions, Distell was expecting to deliver lower growth in
revenue and earnings for the financial year.
DATE FEBRUARY 18, 2009
FOR DISTELL GROUP LIMITED
ISSUED BY DKC (DE KOCK COMMUNICATIONS)
QUERIES JAN SCANNELL, MD, (021) 809 7000 or (021) 809 8101
MERWE BOTHA, FINANCIAL DIRECTOR (021) 809 7000 or
(021) 809 8155
HEIDI BARTIS, COMMUNICATIONS MANAGER, (021) 809 8005 or 082
8858520
TESSA DE KOCK/MARLISE POTGIETER, DKC (021) 422 2690
Date: 18/02/2009 13:02:01 Produced by the JSE SENS Department.
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