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Send  Share  RSS  Twitter  08 Sep 2010

BEVERAGES: KWV Protects Margins

 



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KWV’s revenue increased by just more than 5% to R729 million in the first year following its unbundling – a challenging year characterised by a strong Rand, prolonged recessionary market pressures, industrial action at a service provider and extensive internal restructuring and transformation following the implementation of a new strategy. The business returned to profitability albeit not at sufficient return on equity.

Net profit from continuing operations attributable to shareholders amounted to R78,1 million while headline earnings amounted to R51,3 million. Headline earnings per share increased from a loss of 68,1 cents to a profit of 82,9 cents.

KWV’s best performing brands for the period under review were Roodeberg - which has been averaging double digit growth for the past 10 years - Café Culture and Cathedral Cellar, which both achieved growth in excess of 20%.

The group succeeded in improving its gross profit margin - from 36,6% for the prior year to 38,0%. This was driven by decisions to protect margins, rather than purely driving volume in markets where consumers are increasingly under economic pressure.

Three focus areas were driving performance at KWV this year: brand growth, cost and culture. The business did not deliver the growth that it was aiming for, but managed to protect margins. All costs were well managed during the year - operational and admin expenses in particular - resulting in significant savings. In terms of culture, there has been improvement in behaviour driving performance, teamwork, flexibility and urgency. “Overall, there are some encouraging signs of improved performance, but more is needed to deliver on our strategy,” says CEO Thys Loubser.


 
 
 
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