KWV, Distell shares at highest

KWV, Distell shares at highest

2005-01-21 20:03

Cape Town, January 21 (I-Net Bridge) - The share prices of Distell Ltd, South Africa's largest listed wine and spirits producer, and that of KWV Investments, which holds an effective 30% stake in Distell, have gained 7.9% and 12.4%, respectively, this week to reach fresh all-time highs after Distell issued a bullish trading update late on Tuesday.

As of 15:15, Distell shares were quoted on the JSE Securities Exchange SA at R26.00, unchanged from Thursday's close but R1.90 higher from Monday's closing level of R24.10.

KWV Investments shares performed even better, posting a gain of R3.75 during the week to last trade at R34.00 versus R30.25 on Monday. On Friday the KWV counter experienced an unusual flurry of trading activity, with 1.35m shares changing hands on the day, ten times its monthly trading average of only 135,000 shares and close to its yearly average of 1.62m shares.

However, KWV Investments spokesperson Albert Eckstein confirmed that KWV Ltd, which holds a controlling 55% stake in KWV Investments, had not been behind any trading in the shares on Friday.

Distell owns such well known wine brands as Nederburg, Fleur du Cap, Drosdy Hof, JC le Roux and Two Oceans. It also produces spirits including brandies (Klipdrift), whiskies, and rum (Captain Morgan), amongst others.

In its trading update, Distell said it expects its earnings per share and headline earnings per share (HEPS) for the six months to end-December 2004 to be between 30% and 40% higher than those of the year-earlier period. The rise in earnings was largely attributable to an improvement in trading income and lower financing costs and foreign exchange losses.

The update proved encouraging for the market, as it indicated that the company was overcoming the challenges presented over the past two years of a strong rand and anaemic growth in local wine consumption. Distell has worked hard to raise efficiencies, cut costs and generally improve its production methods in the face of the appreciating rand.

Although growth in wine consumption in South Africa has been outpaced by beer in the past two years, local sales of spirits - brandy in particular - have picked up to help lift Distell's performance as well.

The company expects to release its interim results for the six months to December 31 2004, on February 16 2005.