Peter Lehmann Wines Ltd (PLW) today reported a 9% rise in sales for the first quarter but warned that the current year will be uncertain.

At today's AGM the company pointed to the strong Australian dollar, promotional costs and an increased demand for lower margin wines as challenges in the coming year.

Chairman Richard England, who stepped down at the annual general meeting, said that the company's annual results would be hit by costs related to the takeover battle for control of Lehmann Wines. He estimated these costs to be A$2.9m ($2.04m).

"In this competitive environment, the outlook for the year remains uncertain," said England.

He remains confident, however, that the company can improve on last year's performance. Managing director Doug Lehmann said the group had achieved healthy increases in sales in the UK and European markets in the first quarter. He added that the outlook for the 2004 vintage was positive, as the high volume would push grape prices lower than anticipated, and supply would be adequate.

The Hess group, who now owns 79.1% of PLW shares, will distribute the company's wines in the US starting in January 2004. Lehmann said this would allow PLW to improve its US sales against under-performing figures last year.

As well as England, two other directors stepped down from PLW's board. Hess chairman and chief executive Max Lienhard is due to become a PLW director shortly.