KWV selling its properties
2010-03-18
KWV has sold its property in Robertson, its juice concentrate plant in Upington, as well as some land in Worcester, and will be evaluating all its assets in order to determine utilisation potential. Properties in Paarl, Vredendal and Worcester are in the market, including the De Hoop vineyard and the KWV house in Main Street, Paarl. However, KWV has denied that it plans to sell its head offce, its Paarl cellars or the Laborie Wine Estate as they are part of the core business. These assets are to be optimised. The sale of the properties could amount to a financial boost for the company which has been going through challenging times, CEO Thys Loubser indicated when he announced the interim results of KWV recently. Last year, the sale of the Upington plant brought in R70 million, making a big contribution to cash flow. The first six months’ performance by KWV since its unbundling shows growth of 12.3% in sales volumes, with the South African market being the strongest performer at 14,1% revenue growth. KWV is now for the first time reporting purely on its own wine and brandy operations, without any additional income from its historic investment (now Capevin Holdings). Roodeberg has once again been KWV’s best performing brand, with volumes up 15% compared to the same period the previous year. The Golden Kaan brand also performed beyond expectation globally. The strengthening of the Rand has proved a challenge, impacting negatively on wine exports - which still constitute about 90% of KWV’s wine sales. As a result, revenue increased at a lower rate than volumes by only 10,3% to R395,3 million. Margins have also been under pressure, mainly due to lower than expected bulk spirits sales as well as overall sales mix. Consequently, the gross profit margin has declined from 43% to 37,8% for the six month period. Cost management over the period under review, resulted in lower operating expenses and a 55,8% increase in operating profit. KWV has also experienced a strong, positive cash flow for the period, from improved operating profit, a significant reduction in inventory levels and lower finance cost. These efforts at optimising the business are supported by a dedicated internal transformation programme at KWV.
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