Beverages company Distell, whose brands include Nederburg wines and Three Ships Whisky, says earnings fell in the year to end-June as it took a hit on operations in Angola and Zimbabwe.
The group also set aside a credit-loss provision of R266.1m linked to a Zimbabwean associate, which had to settle trading debts owed to Distell in local currency due to foreign exchange shortages. The group said normalised headline earnings per share adjusted for currency movements, as well as retrenchment and restructuring costs of R168.6m, rose by up to 9%.Investec analyst Anthony Geard said in a note to clients the write-downs in Angola and Zimbabwe were expected but were “painful nonetheless” and “highlight the cost of doing business in the rest of Africa”.
“We stick with our view that alcoholic drinks are more resilient than food brands in tough times, and that premiumisation is a much more relevant theme for Distell than its food peers,” he said.