Distell Group Limited (Distell)
Distell has a June year-end and therefore its results for the 12 months ended 30 June 2018 have been included in Remgro’s results for the year under review. Distell’s contribution to Remgro’s headline earnings for the year under review decreased by 4.6% to R459 million (2017: R481 million).
Distell’s reported headline earnings for its year ended 30 June 2018 decreased by 5.6% to R1 466 million (2017: R1 553 million), mainly due to the stronger rand and certain non-recurring items, while normalised headline earnings adjusted for foreign exchange movements increased by 5.2% to R1 682 million (2017: R1 599 million).
Distell reported for its year ended 30 June 2018 that turnover increased by 10.4% to R24 231 million (2017: R21 940 million), while revenue excluding excise duty increased by 7.7%. Sales volume and revenue growth in the South African market increased by 4.4% and 10.1%, respectively. Distell’s ready-to-drink (RTD) portfolio delivered strong growth in the face of increased competition. The spirit and wine categories also showed continued growth.
African markets, outside South Africa, delivered revenue growth of 19.5% on sales volume growth, which were up 7.0% largely due to the inclusion of KWA Holdings E.A. Limited since its acquisition during April 2017. Focus markets on the continent also recorded strong growth. Volumes in international markets outside Africa grew by 1.8% driven by Europe, Latin America and Asia-Pacific, as well as Travel Retail, with ciders and RTDs delivering strong growth.
RCL FOODS Limited (RCL FOODS)
For the year ended 30 June 2018, RCL Foods’ headline earnings increased by 52.6% to R838 million (2017: R549 million). Remgro’s share of the headline earnings of RCL Foods amounted to R647 million (2017: R424 million) for the year under review.
The improvement in the company’s headline earnings was driven by the recovery in the Chicken business unit, strong volume performances in Dressings, Pet Food and Pies categories, lower interest costs and a tax credit related to an energy efficiency allowance in the Sugar business unit.
The 2018 financial year has presented significant challenges such as the impact of the listeriosis crisis and Avian Influenza on the Chicken business unit, and the impact of dumped imports on the Sugar business unit. Some welcome relief came to the business in the form of lower input costs, as the effects of the 2016/2017 drought dissipated. This translated to lower revenue growth, but had a positive impact on margins. Competition remained vigorous across all RCL Foods’ markets.
RCL Foods’ revenue for the year ended June 2018 declined 2.1% to R24.4 billion (2017: R25.0 billion), largely due to the reduced consequential category (mainly Individually Quick Frozen (IQF)) and other commodity lines) volumes in the Chicken business unit following its restructure in February 2017. EBITDA improved by 17.0% to R2 046 million from R1 748 million, with the associated margin improving 1.4% to 8.4%.
Consumer’s improved result was driven by a recovery in the Chicken business unit, and gains in key groceries categories. Sugar & Milling’s decline was mainly due to lower prices in the Sugar business unit and operational challenges in Baking. Logistics benefited from new business and cost-saving initiatives which offset the reduced Chicken business unit loads through the network, post the Chicken restructure in February 2017.