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Trading update 1 July 2018 to 30 September 2018
Distell Group Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2016/394974/06)
Share code: DGH
ISIN: ZAE000248811
("Distell" or “the Company” or “the Group”)
TRADING UPDATE 1 JULY 2018 TO 30 SEPTEMBER 2018
During the first three months (1 July 2018 - 30 September 2018)
of the new financial year ending 30 June 2019, Distell recorded
flat Group revenue growth with single-digit volume decline
compared to the corresponding period in the previous financial
year.
In South Africa, tough trading conditions persist where consumer
disposable income remains constrained due to the rising cost of
living. Lower volumes were recorded compared to Q1 FY 2018 due
to a price increase taken in October 2017. We have however seen
a positive revenue effect across the portfolio due to further
pricing decisions taken in Q1 FY 2019. This needs to be
balanced appropriately with market share ambitions in the midst
of a constrained consumer environment. Growth in the ready-to-
drink (RTD) segment continues to take share from beer which we
will continue to leverage and drive focused investment. Revenue
trends from mainstream and premium wine continued in Q1 FY 2019
without the effects from the drought being experienced yet.
Revenues from spirits remain stable and we will aim to
capitalize further on trends in the segment and our strong
position in brandy and single grain whiskey, whilst we build on
our FY18 vodka performance. We continue to invest behind core
brands and execution to deliver an increased customer footprint
and market share gains. We anticipate a stronger Q2 FY 2019
given festive season demand and cyclical customer orders over
this period.
In the rest of Africa we achieved excellent volume and revenue
growth, led by Kenya, Botswana, Zambia, Mozambique and Zimbabwe.
All three categories contributed to the growth, with a standout
performance from the mainstream spirits category. Increased
commodity pricing should allow commodity-producing countries to
improve meaningfully, while investment-led growth will benefit
many of the non-commodity-producing countries. We expect our
Angolan operations to capitalize on an improved environment and
see our Kenyan operations to continue on previous trends. We
will continue to expand our local production and distribution
footprint in Africa by further investments, alongside select
joint-venture opportunities.
In the international markets, the UK, Taiwan and Nordic
countries are showing higher volume and revenue growth, with the
global trading environment remaining highly competitive and
trade tensions at heightened levels. Scottish Leader and
Drostdy-Hof was able to achieve good growth, recovering from the
volume losses of the previous year. We will continue to invest
behind select International markets whilst we refine our
operating model and portfolio in these regions.
The outlook for economic growth remains mixed with varying
levels of political and economic risks in many of the markets in
which Distell trades. The Group continues to defend and grow its
domestic market share, integrate its new African route-to-market
acquisitions while creating a more agile and efficient business
which aim to enhance margins going forward.
The abovementioned information does not constitute an earnings
forecast and have not been reviewed and reported on by the
Company’s external auditors.
Stellenbosch
24 October 2018
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
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