Distell impresses with strong H1 earnings

Distell, a prominent maker of spirits and fine wines, has recently made headlines with its impressive half-year earnings report. Despite facing water restrictions and lower harvest production in South Africa, the company managed to increase its headline earning per share by 12.1 per cent to 570 cents per share. Distell's CEO, Richard Rushton, sat down for an interview with CNBC Africa to discuss the company's performance and future outlook. Rushton began by highlighting the significant revenue growth of 9.3% on a comparable basis, underscoring the commendable performance considering the tough conditions in South Africa. He expressed satisfaction with the revenue growth achieved by the company and emphasized the 60 basis point increase in margin, which was deemed critical for Distell. The standout performance came from the African segment, with business outside of the customs union witnessing a growth of over 40%. Kenya, in particular, emerged as a star performer within Africa. The conversation shifted to Distell's expansion plans in Latin America and China, as reported by Reuters News Agency. Rushton clarified that while the company is exploring opportunities in these geographies, its primary focus remains on expansion within Africa. Distell aims to concentrate its international business outside of Africa on premium spirits and wine, aligning with the strategic vision for sustained growth. With the recent increase in the syntax presented by Finance Minister Tito Boeni, Rushton addressed the company's preparation for such changes. While excise taxes saw a moderation in the current year, Distell remains engaged with governments to showcase its contribution to job creation and economic development. Rushton advocated for a prudent approach to excise rate increases to support growth and job creation within the industry. Discussing financial aspects, Rushton highlighted a 3.3% increase in total assets to 24.6 billion rand and a significant CapEx expenditure of 553 million rand. The company has a two billion rand program over the next two years aimed at modernizing production capacity in South Africa and making selective investments in countries like Nigeria, Kenya, Angola, and potentially Zambia. Distell's strong cash generation, amounting to 2.4 billion rand in the last six months, reflects a solid foundation for growth initiatives. The interview also touched on the Nigerian election and its impact on operations. Despite temporary disruptions due to the election delay, Distell is focused on commissioning a manufacturing plant in Lagos to resume activities in Nigeria. The company is prepared to navigate FX risks, with a cautious approach to investment and hedging strategies to mitigate volatility in African markets. In conclusion, Rushton emphasized the company's long-term vision for growth in Africa, underpinned by a balanced portfolio and a strategic spread of businesses across the continent. Distell remains optimistic about its future prospects, leveraging its strong financial position and operational excellence to navigate through market uncertainties and drive sustainable growth.