This interim result is compared to a R3,5 million operating profit in the preceding nine months to end-March, Business Day reported. KWV in 2012/2013 changed its financial year-end to March to bring it in line with its controlling shareholder, Niveus Investments.
KWV CEO André van der Veen said the company’s focus remained on volume growth rather than cost reduction, and KWV still managed to keep its gross margin steady at 35%.
The company’s portfolio of wine and brandy now also includes ready-to-drink brands.
Van der Veen said the volume growth and brand diversification strategy was critical to balancing KWV’s revenue-cost equation.
In the six months to end-September, revenue decreased by 3% to R430 million, compared with the six months to December 2012. Van der Veen, however, pointed out that a like-for-like comparison against sales for the six months ended September 2012 actually showed a volume increase of 5% and revenue increase of 25%.
Business Day reported that while turnover grew and total costs were well-contained at R152 million, KWV’s chance at staying in the black was ruined by a non-operating ‘other loss’ of R23 million, which included exchange rate losses of R38 million.
Van der Veen said the net realised loss of R27 million represented additional income that the group might have earned if did not hedge its export sales book. He said a substantial portion of KWV’s budgeted sales was hedged when pricing agreements with customers were concluded. This was to ensure planned margins were achieved.
