NZ: Oyster Bay Marlborough Vineyards plunges into red
- Impairment charges wipe out profits
- Sales collapse on lower grape prices
- In talks to reform capital structure
Grape prices damage Oyster Bay Marborough Vineyards
A slump in wine grape prices and impairment charges on the value of vineyards has caused Oyster Bay Marlborough Vineyards to swing to net losses for its fiscal year.
Oyster Bay reported net losses of NZD13.8m (US$9.7m) for the 12 months to the end of June, compared to profits of NZD1.5m in the previous year. The New Zealand-based firm was hit by charges of NZD6.9m and NZD9.9m relating to lower grape prices and vineyard value respectively, which were only partially offset by a NZD4.3m income tax credit.
The result has put Oyster Bay in a potentially precarious position as New Zealand's wine industry continues to battle an oversupply problem.
Oyster Bay said today (27 August) that has begun talks with its majority owner, Delegat's Group, on financing. It has also asked an investment bank to help it achieve a "sustainable capital structure".
"The New Zealand wine industry continues to forecast a supply imbalance for the foreseeable future," said the firm. "While the relationship with Delegat’s Wine Estate Ltd means our crop will be acquired, the change in average market grape prices has left the company exposed," it said.
Sales collapsed in the fiscal year due to a NZD6.9m write-down charge related to lower grape prices. Net sales dropped by 90% on the previous year, to NZD1.2m.
Delegat's Group, which owns the Oyster Bay wine brand and 55% of Oyster Bay Marlborough Vineyards, today reported profits down by 99%, to NZD177,000.
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