S AFRICA: Distell cautious as FY profits dip
- Profits down on margin pressure
- Drinks sales rise at home and abroad
- Bisquit integration progressing well
Cider boosts Distell in native South Africa
South African drinks group Distell has reported a dip in profits for its fiscal full-year, despite a solid increase in sales against a tough consumer climate.
Net profits for the 12 months to the end of June slipped by 1% on the previous year, to ZAR943.6m (US$128.3m), Distell said this week. Operating profits fell by 1.2%, said the Amarula Cream and Savanna cider owner.
"The reality is that not even the benefits derived from the ongoing improvement in operating efficiencies or the improved throughput could protect margins and profitability," said Distell's managing director, Jan Scannell.
Despite pressure on margins, Distell increased net sales for the year by nearly 9%, to ZAR11.8bn, with volumes up by 7%. Double-digit gains in the privately-held group's international division drove growth. "What is particularly pleasing is that international volume growth was achieved across all important categories with spirits and wine sales volumes growing by 14.4% and 6.8% respectively," said Scannell.
Net sales still rose by 9% at home in South Africa, led by cider and ready-to-drink beverages.
Scannell said that he was cautious on the firm's short-term outlook. “Unemployment and limited disposable income are likely to continue to impact adversely on consumer spending," he said. "We expect the trading environment to remain extremely competitive, both domestically and internationally."
The firm added that it has made good progress on the integration of the Bisquit brand, which it bought from Pernod Ricard for EUR31m (US$39m) in April 2009. "We have commissioned our own production facilities, recruited additional staff, defined brand and marketing platforms, finalised distribution agreements and upgraded brand packaging," said Scannell.
"The brand’s performance in its established markets has already exceeded our expectations and we are looking forward to making headway in new territories such as Eastern Europe and Asia.”
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