Strong KWV results in competitive market
2006-04-06
KWV has achieved good results in the first half of the financial year, despite a competitive buyers’ market for wine.
International trading conditions remained tough, but positive support for KWV’s products in the local market, in addition to initiatives launched in specific overseas markets, contributed to an increase of 87,8% in headline earnings amounting to R70,8 million compared with R37,7 million in the same period last year.
Adjusted headline earnings amounted to R87,5 million, an increase of 38,1% over the previous period.
KWV’s operating profit from normal operations increased by 31,2%, from R45,4 million in the first half of the previous financial year, to R59,6 million.
Turnover was 9,4% higher at R635.6 million.
KWV entered the local market two years ago. Since then, South African wine and brandy consumers have shown strong support for KWV’s products and this market has shown major growth.
The company successfully expanded its initial offering of selected products with the addition of the KWV 3 Year Old Brandy, KWV Classic and KWV Cathedral Cellar wine brands.
“Sales of our wines and brandies in South Africa have exceeded expectations, and we have also performed well in the rest of Africa,” KWV’s CEO Willem Barnard, said.
The export of branded products showed mixed results in the respective markets.
KWV had to weather difficult trading conditions in the Far East and the UK market, whereas the Americas and Germany showed steady growth.
KWV has strengthened its position in Germany with the acquisition of a respected trading company, Reidemeister & Ulrich, through KWV’s subsidiary Eggers and Franke.
Profitable growth in the local market and the strengthening of KWV’s market share in Germany, are two important contributing factors to an increase of 20,9% in gross profit.
Despite an improvement in the operating performance of its associates, KWV experienced a decrease of 14,1% in income from associates in the period under review, due to the once-off cost of Distell’s Black Economic Empowerment transaction.
“The strategic decisions that KWV made are supported by these positive results," Dr Barnard added.
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