Australian Vintage expects to double FY profits

Australian Vintage expects to double FY profits

Australian Vintage has injected a shot of optimism into the Australian wine industry by reporting a rise in branded wine exports and progress on cutting debt.

Branded wine sales rose by 9% in calendar 2009, led by strong growth for the McGuigan label in the UK off-trade, said Australian Vintage today (27 January).

"This is particularly impressive given that in the Australian industry overall export sales for the 12 months were down 8%," said CEO Dane Hudson.

Optimism from Australian Vintage, Australia's second largest wine firm, offers a timely boost to the country's wine sector.

Australia is producing up to 40m cases more than it is selling annually and nearly a fifth of wineries fail to make a profit, according to a damning industry report published late last year.

Australian Vintage reported net losses of AUD123m (US$111m) in its most recent fiscal year, to the end of June, partly due to one-off charges connected with an overhaul of its business.

With restructuring complete, Hudson said today: "Australian Vintage continues to target doubling its tax after profit for the [current] full year."

Group net debt of AUD140m at the end of December 2009 is AUD30m lower than in December 2008.

Australian Vintage is in talks with Constellation Brands on taking control of a part of Constellation's Australian and UK operations. Constellation owns Hardys in Australia.

A joint venture deal, controlled by Australian Vintage, is considered the most likely outcome. Discussions between the two companies' boards "continue", said Hudson today.

Australian Vintage will report its half-year results, to the end December, on 25 February.