South African alcoholic drinks company Distell has taken a double blow from FX issues in Angola and Zimbabwe, two of its key expansion markets. The company has been forced to write down investments by $34.6m in Angola and put in a credit loss provision of $17.6m in Zimbabwe.

Distell acquired a 26% stake in Best Global Brands Limited, an Angolan alcoholic drinks company, in 2017. It retains the option to purchase the remaining 74%.

Distell has said that “although BGB has grown volumes and maintained market share since Distell’s investment, the group has decided it would be prudent to impair about two-thirds of the value of its 26% investment in BGB.” Accordingly, Distell has written down its investment in BGB by R790.1m ($52.2m) because of the devaluation of the Angolan kwanza. Over the course of Distell’s financial year the Angolan kwanza has lost 33% of its value against the rand.

The situation in Zimbabwe is no less dire because of the ongoing currency crisis that has seen prices in supermarkets rocket and shortages across the supply chain because of a lack of dollars.  Distell co-owns African Distillers (Afdis) with brewer Delta Corporation (part of AB InBev), with an indirect 31% stake in the Zimbabwean alcoholic drinks company. Distell also supplies Afdis, which is the Zimbabwean distributor for Distell brands such as Amarula and Klipdrift. Distell has been forced to make a R266m ($17.6m) credit loss provision for money it is no longer expecting to get back  that it gave to the Reserve Bank of Zimbabwe. The central bank was supposed to hand back that investment by the end of 2020.

The net result has is that headline earnings, which exclude once-off and abnormal events, will be down by 6%.