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Distell says half-year profits could rise even after booze ban

As its businesses outside of SA helped to ease some of the pain from an outright ban and other restrictions.
Image: Moneyweb

Drink maker Distell said on Wednesday its half-year profits could rise by up to 13.6% as its businesses outside of South Africa helped to ease some of the pain from an outright ban and other restrictions on alcohol in its main market.

The company, which makes wines, spirits and cider and earns over 70% of its revenues at home, has been hit-hard by three total prohibitions and limitations on alcohol trade aimed at easing the burden on hospitals during the coronavirus pandemic.

It said on Wednesday it expects its headline earnings per share – the main profit measure in South Africa – in the six months to December 31 to be between 595.5 cents ($0.4016) and 623 cents, compared to 548.6 cents it reported a year earlier.

That is despite the period capturing the impact of two successive bans, one lasting from mid-July to mid-August and a second instituted a few days before the period ended in December.

“Apart from a resilient South African business, Distell’s businesses in both African and international markets are performing well by capitalising on previous investments and focused execution,” Distell said in a trading statement, adding it would continue to pursue growth opportunities elsewhere.

It said revenues were flat in South Africa, helped in part by stockpiling as people feared further bans. Across Africa, excluding its home market, revenues rose by 12.7% while its business beyond the continent saw 15.4% revenue growth.

Distell warned that a full month of trading had already been lost in the second half of the year and that the rules around alcohol trade remain unpredictable, but that it was confident in its ability to generate cash and that it had sufficient liquidity headroom.

An industry-wide surplus of wine caused by the bans, meanwhile, was a “major concern”, it added.

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