* Puts dividend on hold despite 11% first-half profit jump
* Cites concern over possible future alcohol bans
* Says increased duties will fuel illicit alcohol market (Recasts, adds detail, shares, quote)
JOHANNESBURG, Feb 24 (Reuters) – South African drinks maker Distell kept dividends on hold on Wednesday despite posting an 11.2% jump in half-year profit, citing the threat of further alcohol bans in its main market.
The wines, spirits and cider producer had flagged that profit could rise by between 8.6% and 13.6% for the last six months of 2020 even though that period included two alcohol prohibitions implemented in South Africa as part of coronavirus restrictions.
A “resilient” performance in South Africa, solid growth elsewhere and a “marked improvement” in its liquidity position was not enough, however, to prevent suspension of the dividend on uncertainty over potential future alcohol bans.
“The group continues to protect liquidity as a priority given the ongoing impact of COVID-19,” it said, adding the dividend decision would be reviewed at the end of the financial year.
South African Finance Minister Tito Mboweni, meanwhile, announced an 8% increase in taxes on alcohol and cigarettes in his budget speech on Wednesday.
In a separate statement, Distell said the move would entrench an illicit market that had grown during the bans, push cash-strapped customers towards home-brewed alcohol and worsen ban-induced oversupply issues, particularly for wine.
Distell’s headline earnings per share – the main profit measure in South Africa – stood at 612 cents ($0.4190) for the period, against 548.6 cents a year earlier.
Shares in the company closed with a 0.6% gain before release of the results statement. ($1 = 14.6079 rand) (Reporting by Emma Rumney Editing by Jan Harvey and David Goodman)