The Australian wine company McGuigan Simeon Wines today reported revenue for the first half of the year up 18% to A$126m, as the company weathered tough trading conditions.

Net profit, after significant items, reached A$14.8m up 59%, on sales up 18%, as the company made significant gains in higher margin branded products.

Sales of bottled wine reached A$36m up 81% reflecting a focus on higher margin branded products, scale and mature distribution and the acquisition of
Miranda.

Bulk sales, meanwhile, fell 26% to A$8.3m, as the company increased its emphasis on own brands in a more competitive bulk wine market.

Total export sales, bottled and bulk, grew 5.6% to A$58.6m on the back of increased marketing efforts.

Exports of branded bottled sales increased 55% to A$25.4m based on strengthening distribution alliances with customers, particularly in the
UK and Europe.

The fall of 15% in export bulk wine (bottled and bulk) to $33.2 million reflects "the company's redirection of wine into the branded market and a more competitive market for bulk wine," McGuigan Simeon said.

"These are strong results for the company. Given the oversupply of some grape varieties and shortage of others, the impact of the strengthening Australia dollar and increased competition, this is a very solid performance," McGuigan Simeon chairman David Clarke said today.

"They demonstrate the strength of McGuigan's geographic diversity and
balanced income streams," Clarke said.

Managing director Brian McGuigan said "this is a great result, given the market conditions, and reflects the strength of the company's strategy. This strategy involves a dedication to our brands at home and abroad, and our continued focus on restraining company costs".

"The result reflects years of investment in developing strong distribution in
Australia, the UK and Europe and a very clear strategy to develop a truly world class integrated wine company.

"Despite severe competition and the Australian dollar we have grown profitable markets outside Australia.

"We remain committed to being the lowest cost producer of wine and in the past six months we have focused on grape supply and security to address quality and cost of supply. We believe there is further opportunity to improve productivity with the integration of Miranda.

Looking forward the company said that on current indications, it expects vintage will be up by 15% to 25% on last year

Clarke said: "We believe that competitive trading conditions for the industry will continue and the impact of currency movements will continue to dampen wine exports in general.

"While we recognise these challenges, our trading results for the first month of the second half, together with the flow through of benefits from the Miranda acquisition, should see McGuigan Simeon continue to grow and meet our target of double digit profit growth in 2004."