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Johannesburg - Distell's younger brands in the cider and ready-to-drink (RTD) categories helped the Stellenbosch-based liquor group shrug off a spending hangover in the later parts of its financial year to end June 2008.
Distell's local sales volumes increased 4% thanks mainly to a spirited showing from cider brands like Savanna and Hunter's as well as RTDs like Bacardi Breezer and Esprit. The group's cider and RTD sales volumes were up almost 7%.
Distell MD Jan Scannell said the performance from the ciders and RTDs was all the more gratifying because the divisions were hampered by production constraints stemming from the national shortage in packaging supplies and carbon dioxide.
Spirit volumes increased 2.1% thanks to growth in liqueurs, key brandy brands (Richelieu and Klipdrift), and whiskies. "Scannell said Distell's flagship export brand Amarula further entrenched its position as category leader.
Also encouraging was progress made in penetrating the fast-growing whisky category - a segment where perhaps Distell has not traditionally been well represented.
Scannell said Distell's top whisky performers included its own products like Harrier, Knights and Three Ships as well as Scottish Leader and Black Bottle.
He noted that while the entire white spirits market had remained under pressure, Distell brands had retained market share.
The group's wine portfolio - competing in a fragmented and competitive local market - showed "profitable" volume growth of 2%. Distell's best-known wine brands include Fleur du Cap, Zonnebloem, Nederburg, Drostdy Hof, Tassenberg and Chateau Libertas.
While Distell clearly held its own in volume sales, one should not forget that the group has built a reputation for running a tight ship; or as Scannell puts it "an ability to constantly raise the performance of operating units".
This is evident in the improved trading margin of 14.2% (last year: 13.6%), which helped turn a 15% gain in turnover to R9.5bn into 20% gain in trading profits to R1.3bn.
Despite the tough global trading environment Distell increased international revenues to 20% of total revenue from around 18% last year.
International sales volumes, excluding Africa, increased 13.4% - translating into a 24% in revenues to around R2bn.
Distell remains strong cash generative (operating cash flows came in at R891m), which saw the final dividend hiked 21% to 132c/share (bringing the full-year payout to 236c/share).
Looking ahead, Scannell said that in a climate of declining disposable income, it would be the strongest brands - supported by investment in infrastructure, marketing and service levels - that would prevail.
He said Distell would grow revenue and earnings - "albeit at more modest levels".
- Fin24.com