Australian Vintage reports $4.4m profit for half year

19 February, 2015

Major Australian wine producer, Australian Vintage has announced half year net profits of AUS$4.4 million, up from $4m, for the half year to December 31, 2014.

Total revenue was up 16% to $121.7m versus $104.8m for the same period in 2013, which reflected higher UK/Europe and Australasia/North America sales, according to the company.

Cash flow from operating activities was positive: $8.4m. Net debt was $95.6m, compared to $111.8m as at June 2014. Sales of the McGuigan, Tempus Two and Nepenthe brands increased by 19%.

The company finalised the sale of the Yaldara winery for $15.5m with an after tax profit of $6.2m.

AVL chief executive Neil McGuigan said: "The continued growth of our three key brands is very encouraging. However, due to the higher cost of our 2014 vintage and some large bulk wine sales, the improved sales did not directly translate into improved margin dollars.

“Our branded business continues to grow and what is really pleasing is the continued growth of all our three key brands. McGuigan, Tempus Two and Nepenthe increased sales by 19% and these brands now make up 60% of our total wine sales. In comparison, for the six month period to December 2010, the sales of these brands made up 39% of total wine sales.

“Vintage has started and the early signs are encouraging. Yield and quality seem very good. As usual we will provide the market with an update after the 2015 vintage has completed,” said McGuigan.

Overall AVL revenue for the period increased by 16% due mainly to increased branded sales in UK/Europe and the Australasia/North America segments, reports the company. UK/Europe sales were up by 20% on the previous period due to the increased sales of the McGuigan brand (up 28%). However, contribution from this segment declined by $0.9m due mainly to the higher cost of the 2014 vintage and some large non-recurring bulk wine sales. The exchange rates have been favourable, but unfortunately not all the benefits could be retained due to margin pressure.

Australasia/North America packaged sales increased by $5.5m to $51.4m due to increased sales of the McGuigan brand (up 6%) and low margin cask (up 26%). Contribution decreased by $0.7m to $3.3m due to increased distribution and marketing costs and the costs associated with the recently opened office in Hong Kong. The higher cost of the 2014 vintage also contributed to the decline in contribution from this segment.

Within the Australasia/North America packaged segment every division recorded increased sales, states AVL.

Division - Increase in Sales

Australia 10%

New Zealand 42%

Asia 11%

North America 14%

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