KWV has massive profit loss 3 October 2007

Big liquor company may sell off subsidiaries

Despite a hearty helping of income from its holdings in Distell, the KWV drinks company of Paarl reported a massive drop in profit for the year ended June. The company’s German subsidiary took a serious knock, opening suggestions that the company may sell off some of its interests.

Profit dropped R74.6 million in the year, from R87.8 million to R13.2 million, despite revenue increasing 11.4 percent to R1.3 billion, compared to R1.1 billion in 2006, according to the just-released annual report.

Chief executive Thys Loubser, only six months on the job, said the group operating results had been damaged by a number of exceptional events and unfavourable trading conditions in some overseas markets. Factors that contributed to the problems include an operating loss of R21 million by the group's German subsidiary, Eggers & Francke, compared with an operating profit of R6 million previously.

Also the recent, grandly-acquired distribution company, NMK Premium Global Brands, took a toll with operating losses of R8.8 million. NMK’s inventory had to be written down to a net realisable value amounting to R40.7 million. Loubser told Die Burger that the problems at NMK relate to top management leaving.