AUS: Australian Vintage upbeat despite H1 profits fall
Australian Vintage sees strong demand for branded wine
Australian Vintage has said that its trading has continued to improve over the last six months, despite a 41% drop in half-year net profits.
Net profits sank to AUD5.9m (US$5.98m) for the six months to the end of December, Australian Vintage reported today (7 February). However, it said that underlying profits, which exclude one-off gains in the previous year, doubled for the six months to AUD3.8m.
Branded wine sales leapt by 12% in value, but the the strong appreciation of the Australian dollar against the US$ and GBP hampered returns for the McGuigan wines producer. Net sales slipped by 1.7% for the half-year, to AUD114.6m.
"The financial results for the first six months are a significant achievement given the 13% appreciation of the Australian dollar against the British pound, AVG’s key export market," said Australian Vintage's CEO, Neil McGuigan. "Our business continues to strengthen despite the ongoing pressure on the industry," he added.
The company said that it expects underlying net profits to increase for the full-year.
Group chairman Ian Ferrier said that he expects the market for Australian wine to remain volatile and that the 2011 grape harvest will be difficult. "The economic conditions in the UK, in particular, will make future sales and margin growth challenging,” he said, but added: "We have restructured the asset base and the focus on branded sales is driving our performance."
Ferrier said that CHAMP Private Equity's buyout of Constellation Brands' Australian business, including BRL Hardy, bodes well for the sector. "It demonstrates a level of conviction that wine is fundamentally an attractive business and that Australian wine producers are well placed to participate in medium-term upside from an improving global wine cycle," he said.
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