The strengthening of the rand negatively affected wine and brandy producer KWV’s performance in the six months to December, and the group is likely to face the same challenge in the second half of the financial year.

Absa asset management analyst Chris Gilmour said the rand was still getting stronger. “It is going to be a problem for them.” The continuing stronger rand will dampen the group’s sales in Europe – to which it exports 90% of its wines.

Gilmour said he expected the rand to weaken in the third quarter, which should coincide with a possible strengthening of the dollar when the US increases interest rates.

KWV’s revenue rose 10,3%, to R395,3m from R358,5m.

“The challenges are not getting easier,” said KWV CEO Thys Loubser. “The recession might be over but we are certainly not feeling that in the market.”

Group sales volumes increased by 12,3%. Revenue in the South African market grew by 14,1%, while business in the UK and the rest of Europe increased 8,4%.