Wine firm Australian Vintage has posted a "disappointing" half-year loss, due to chronic oversupply exacerbated by a large 2008 vintage.

For the six months ended 31 December, the company reported a net loss after significant items of A$127.8m (US$83.6m), compared with A$600,000 for the same period in 2007.

"These results should be considered in the context of one of the harshest and most unforgiving six months ever faced by the company," Australian Vintage said today (25 February).

Despite this, total sales for the half-year rose 11% to A$146.4m.

Longstanding vineyard and grape purchase contracts have penalised the company and, combined with retailer pressure on margins, caused EBIT before tax to fall to A$5.7m, from A$10.4m in the first half of the last financial year.

"We are disappointed with the interim result," said acting chairman Ian Ferrier. "Given the global economic crisis and overlay, the crippling Australian wine industry issues of drought, oversupply and demand imbalance, Australian Vintage has made solid progress in facing up to the new reality of the global wine industry."

Ferrier added: "There is more work to do with addressing our cost base and providing support to develop our new markets and this is an urgent focus for Australian Vintage. The new reality is equally challenging, but through the review we have put ourselves in the best strategic position to return to profitability."

The company said it is budgeting for a "small" operating profit before significant items in 2008/09.