McGuigan Simeon has warned that first-half profits will come in at over 50% down on figures posted in the corresponding period a year ago.

The Australian wine group said today (22 November) that the country's grape glut will hammer earnings for the six months to 31 December - and admitted full-year profits would also be lower than a year ago.

In August, McGuigan reported a net loss of A$11.5m (US$8.8m) for the year to 30 June, after writing off almost A$30m in stocks amid a glut of red wine.

"After three years of record vintages, we believe that today Australia has anywhere between 700m to 1bn litres of excess wine," McGuigan chairman David Clarke told shareholders at the company's AGM.

Clarke said a global over-supply of wine and falling retail prices meant that producers were trading "in one of the worst crises the wine industry has ever faced".

However, Clarke said there is light at the end of the tunnel in the shape of the current drought in Australia. He said: "The drought that is having devastating effects on Australia may assist the wine industry by constraining production. Some producers are closing down marginal vineyards. The 2007 vintage will definitely be lower but it is too early to estimate how low."

Clarke insisted McGuigan is in "sound financial shape" amid growing exports, particularly the UK.