David Nurek Chairman. Distell is A global company of South African essence Innovative, with a clear...
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Transcript of David Nurek Chairman. Distell is A global company of South African essence Innovative, with a clear...
David NurekChairman
Distell is
• A global company of South African essence
• Innovative, with a clear focus on key brands
• Lean, flexible and responsive to consumer needs
• A people company where every stakeholder is important
Corporate governance
• Board committed to principles of good governance
• Highest standards of integrity, fairness and social responsibility
• Formal critical evaluation was conducted of our compliance with King II and JSE Securities Exchange requirements
Characteristics of South African macro environment in 2001/2002
• Softening Rand– Negative impact– Positive impact
• Increased integration with the world economy
• Volatility
US$/Rand exchange rate for the year to June 2002
0.122040.12052
0.11588
0.10813
0.08699
0.10813
0.08638
0.08737
0.09881
0.09862
0.09053
0.08720
Average per month
PPI
135.6
Excise on spirits
128.6
Ace 5kg Maize
162.0
CPI, PPI and food pricesindexed to JJ 1999
Sou
rce: A
C N
ielse
ns, Diste
ll
CPI
122.5
Klipdrift (inbond)
116.8
Effects in 2002
• Windfall income from exports – Maintained prices in foreign currency
• Raw materials scarcity - imports to sustain markets
• Increased costs of inputs– Packaging– International structures & marketing
Imperative to increase exports to reduce risk
Final household disposable incomeS
ource
: Re
serve
Ba
nk, AC
Nie
lsen
s
Non - durable goodsFinal household consumption expenditure (1995 prices)
Sou
rce: R
ese
rve B
ank, A
C N
ielse
ns
Local market trendsS
ource
: Nie
lsens 1
2 m
on
ths to JJ
Financial highlights
• Merger integration process completed• Increase of 6,7% in sales revenue• 24,3% growth in trading income• Headline earnings up 33,6%• Total dividends increased 32,1%
In an environment of increasing domestic volatility it is essential to be an effective international player
Etienne HeynsDirector - International
Operations
• World class service
• Wines
• Africa
• Amarula
Strategic approach
Amarula strategyAspirations
• To become the preferred cream liqueur in the world
Strategy • Premium positioning with strong
support– Premium pricing (compared to
Baileys)– ‘Big distribution’ channels– Strong marketing support– Financial commitment
• Strong distribution partners– Brown Forman (USA)– First Drinks (UK)– Peter Mielzynski Agencies (Canada)– Aurora (Brazil)– Underberg (Germany)– Marie Brizard (Spain)
Amarula - achievements & prospects
• Strong growth: USA, Canada • Slower yet good growth: Germany,
Spain• Consolidate: Brazilian triangle• UK - turnaround plans in place
Amarula already biggest contributor to marginal income of Distell - set to grow
Africa - strategy
• BLNS - use established structures
• Substantial direct investment in key markets• Limited structures in markets with good potential but risk elements
• Develop efficient distribution for further markets
Africa - achievements & prospects
• Other than BLNS, performance disappointing
in 2002• Plan
– Tailored marketing approach– Flexible distribution structure– Aggressive sales approach– Adaptable and tailored production configuration– Optimal share investment
• Expected return - 3 fold increase
Wine strategy
Wines - achievements• New organisation - fully staffed (including
UK key account manager, value chain analyst)
• Customer segmentation completed• International logistics in place• New APO forecasting in place• UK strategy in place - new listings• USA pilot project• Germany, Norway - new listings• Major new product developments
World class service
• Distell must deliver– very large volumes– consistent quality– at target cost– on short notice– always on time
World class service
Jan ScannellManaging Director
New way of working - DMOS
Our employees
• Loyal - 45% of staff over 10 years’ service
• Average age of 38• Recruitment of new talent
Employment equity
• Plan in place• Management measured on
attainment of goals
Corporate social investmentMust align with corporate objectives• Arts & Culture
– Distell Foundation, Oude Libertas Amphitheatre, Arts festivals
• Environment – waste reduction, effluent, recycling, IPW
• Transformation– Papkuilsfontein, Phalaborwa, Mandela
• Health– ARA, Advertising code
• Combating crime
The merger
• Forecast merger savings will yield 36% on investment of R484 m - 96% has been realised to date
• With the merger embedded, we will now build our brands
We will focus on 3 themes in 2002/03
Risks
• Competition authorities• Gordon’s Gin• Liquor Act• Advertising• Illegal products
Progress in respect of 5 year objectives
International revenue as % of turnover
Target 2003 - 20%
TargetActual
Progress in respect of 5 year objectives
Return on equity
Target 2003 - 16.5%
TargetActual
Thank youQuestions?
www.distell.co.za