Distell Shares Climb as Liquor Sales Grow Outside South Africa
(Bloomberg) -- Distell Group Holdings Ltd.’s shares rallied after South Africa’s biggest wine exporter grew revenue outside its home market.
Its international business expanded as the wine, spirits and cider maker boosted online sales and raised margins, especially of its premium whiskey brands in the six months through December, the Stellenbosch, South Africa-based company said in a statement Wednesday. Earnings are expected to rise as much as 18% in its first half, it said.
South Africa has used a succession of liquor bans to reduce alcohol-related cases at trauma wards and help hospitals cope with a surge in coronavirus infections. The first prohibition was in place for more than nine weeks through May last year, and was later re-imposed during the height of two separate peaks in mid-July and late December. The ban was eased this week after a two-month spike in cases abated.
The stock rose as much as 6%, the sharpest jump in two months, and traded 5.3% higher as of 9:12 a.m. in Johannesburg. That brings its gains this week to 11%, set for the strongest performance since Nov. 6.
Distell lost 41 trading days in South Africa, its largest market by revenue, in the six months through December. While the volume of alcohol sold in the country dropped 1.4%, revenue was almost flat, it said. In the rest of Africa, there was a recovery in trading after border closures were eased and there were no further bans on alcohol sales.
“The group remains cautious as it trades into the second half of the current reporting period where a full month’s trading has already been lost, and potential implementation of future alcohol bans in South Africa remain unpredictable,” it said. “The current surplus of wine in South Africa created by previous bans is also a major concern to the group, which may bring long-term structural challenges to the wine industry.”
Citi Sees Alcohol Bans as Lingering Issue in S. African Retail
Distell’s sale of its Plaisir de Merle wine farm is expected in the second half of the financial year, it said. The company will announce first-half results on Feb. 25.
©2021 Bloomberg L.P.