AUSTRALIA: Lehmann sales up, profits dive
Peter Lehmann Wines Ltd has announced a large fall in half-year profits despite a rise in revenue. The company also warned that its margins could come under continued pressure going forward.
Net profits for the half year to 31 December were down by 86% to A$403,000, as revenue grew by 8% year-on-year to A$24.182m. No dividend was proposed.
Basic earnings per share dropped to 1.07cents compared to 7.89cents for the previous corresponding half.
The company blamed fierce competition in the sector and one-off legal costs for the fall in profits.
During September and October last year, Lehmann was subject to a takeover by the Hess Group AG, with Allied Domecq plc making counter offers. Hess Group AG has acquired 85.67% of the shares and Peter Lehmann, the founder, has reduced his holding to 10.35 per cent of the shares. PLW incurred legal and adviser's costs of $2.794m during the takeover.
In a statement, the company said: "While sales volume has lifted over the past six months, the takeover battle that ensued during the second quarter between Allied Domecq PLC and Hess Group AG undoubtedly did have an impact on the performance of the company."
Not including the legal costs, however, earnings before interest and tax still fell by 11% to $4.41m.
The growth in revenue is expected to continue through the second half, the company said. "However margins will continue to remain under pressure with increasing demand for cheaper wines, stout competition in all market sectors, the high costs associated with doing business and the Australian dollar impacting on all export sectors," it added.
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