AUS: Australian Vintage reports FY losses, end of 'golden age'
Restructuring costs and impairment charges have led Australian Vintage, Australia's second largest vineyard owner, to report net losses for its fiscal full-year, despite a rise in wine sales.
Net losses after charges for the 12 months to the end of June were A$123.6m (US$102.7m), compared to profits of A$1.3m a year earlier, Australian Vintage said today (26 August). Losses were $167m when a $43m tax gain is stripped out.
"The bottom line is that the Australian wine industry is facing a new stark reality, the old golden age has well and truly gone," said group CEO Dane Hudson.
Both companies have sought to restructure their businesses amid an oversupply of low-end Australian wine.
Australian Vintage (AVG) said in February that it anticipated a one-off charge of $127m in the full-year, due to a business overhaul following a strategic review. Devaluation of assets and "onerous" grape supplier contracts were the main contributors to the firm's losses.
Despite the structural problems, the company outperformed the market with a 9% rise in wine sales for the year, to $288m, although total export sales slipped 10% on the prior year.
"AVG's export branded sales were up 8% with growth in every market except New Zealand," said Hudson. "Our total Australian packaged sales increased by 6% in a competitive market driven by a 24% improvement in sales with the major retailers. Worldwide sales of the McGuigan brand were strong with case sales growth of 15% and net sales growth of 8%."
The firm recently extended its debt facility with its major bank for a further two years, owing to its improved financial position in the fiscal second half. It has cut net debt by 14% to $24m in the last six months.
In its outlook, the group remained cautious about the short-term prospects for the industry: "It is hard to predict the impact of the industry's transformational change, particularly sales of excess stock, but we anticipate further upheaval in both supply and demand," said Ian Ferrier, today appointed chairman of AVG.
Ferrier has served as interim chairman since December 2008.
Last week, AVG told just-drinks that it is withholding funding from trade body Wine Australia, due to a disagreement on marketing strategy for Australian wine.
For the full results announcement, click here.
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