NZ: New Zealand Wine Co swings to losses
- "Perfect storm" drags company into red
- Calls for industry discipline on grape harvest
- Issues no guidance for year ahead
New Zealand Wine Co hits rocky ground
New Zealand Wine Company has dropped into the red for its fiscal full-year and has called for industry-wide discipline to reduce the effects of a "perfect storm" on the country's wine sector.
New Zealand Wine Co said today (26 August) that it swung to net losses of NZD1.9m (US$1.3m) for the 12 months to the end of June. It reported profits of NZD1.3m in the previous year.
The firm said that it had been hit by a "perfect storm" of oversupply, a strong NZD currency and the global financial crisis. However, net sales crept up by 4% to NZD13m.
Group CEO Rob White welcomed the country's lower grape harvest in 2010, but warned that more is required for New Zealand to overcome a wine glut that has threatened to cripple the industry.
"We intend to maintain a disciplined approach to control our 2011 grape harvest," he said. "It is important for the reputation of 'Brand NZ' and, in particular, 'Brand Marlborough', that this is an industry-wide approach.”
Alton Jamieson, chairman of New Zealand Wine Co, said: "The NZ bulk wine surplus peaked at 43m litres in 2009 and sales rose from 20% of total NZ export sales volume in the June 2009 financial year to 27% in the June 2010 financial year, which is severely testing the financial sustainability of the wine industry.
“NZ’s bulk wine surplus created opportunities for substantial global competitors to bottle NZ wine and create new labels with no history or brand equity that have significantly undercut the branded wine export prices of NZ wine companies.”
He added: "NZWC is pursuing a strategic growth plan to increase the scale of the business to more than 500,000 cases of branded wine, which would enable the company to increase its in-market resources in key markets and realise a number of operational and financial benefits to add value for shareholders.”
The firm said it would not pay a dividend to shareholders for its most recent fiscal year. It added that it could not provide reliable net earnings guidance for the 12 months ahead.
Earlier this week, official figures showed that New Zealand's wine surplus oveshadowed a 5% rise in exports by value for the year to the end of June.
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