Multinational brewing and beverage company Distell has warned that the coronavirus lockdown will have a significant impact on its business.<\/p>\n
The company makes a number of popular wines, spirits and ciders in South Africa – including Hunters, Savannah, Richelieu and Nederburg.<\/p>\n
In a trading update published on Friday (15 May), the group said that profit attributable to ordinary shareholders for the 10 months ended April 2020 is expected to be about 25% lower than the corresponding period of the previous year – including approximately six weeks of no trading due to lockdown regulations.<\/p>\n
It advised shareholders that the group’s basic earnings per share (EPS) for the financial year ending 30 June 2020 is expected to be between 45% (178.4 cents per share) and 65% (257.7 cents per share) lower than the 396.5 cents per share of the corresponding period of the previous year.<\/p>\n
Headline earnings per share (HEPS) for the same period are expected to be between 60% (391.7 cents per share) and 80% (522.3 cents per share) lower than the 652.9 cents per share of the corresponding period of the previous year.<\/p>\n
Distell warned that its results could be further exacerbated by a number of factors over the next month and a half, to the end of June. Key will be whether the group will be allowed\u00a0to sell limited alcohol under the country’s level 3 lockdown restrictions.<\/p>\n
These restrictions could impact trading as well as the potential impairment of stock dependent on restrictions and timing, it said.<\/p>\n
On a more positive note, Distell said that there is potential for a temporary short-term spike in demand following the easing of lockdown provisions.<\/p>\n
“The group has resumed limited operations in certain locations related to the production and transport for export purposes only, in line with Level 4 regulations,” it said.<\/p>\n
“Production facilities involved in alcohol production and blending for sanitizer purposes remain operational in line with lockdown guidelines and classification of essential items.<\/p>\n
“Current inventory levels are sufficient to satisfy both export and domestic retail channels upon further relaxation of regulations.”<\/p>\n
New rules\u00a0<\/strong><\/p>\n The Liquor Traders Association of South Africa (LTASA) has called on the government to allow for the sale of liquor under level 4 lockdown restrictions.<\/p>\n The association represents 1,410 off-consumption liquor stores that employ over 14,000 people.<\/p>\n Alcohol sales will likely be allowed again under level 3 lockdown restrictions, which president Cyril Ramaphsa said is likely to happen before the end of the month.<\/p>\n Under current level 3 proposals, off-premises consumption of alcohol will be allowed, subject to limited hours (Mon-Wed 08h00 \u2013 12h00), and subject to an approved industry plan on social distance and quantitative restrictions.<\/p>\n However, the group said that its members cannot wait until alert level 3 to trade, as ‘it will be too late’.<\/p>\n Instead, it has proposed strict rules around the sale of alcohol in South Africa under level 4, including:<\/p>\n\n
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