The crisis facing the Australian wine industry has hit another producer, Simon Gilbert Wines, hard.

The company today (13 September) posted a massive fall in full-year profit.

Simon Gilbert turned in a loss from ordinary activities in the year to 30 June of A$2.9m (US$), a 200% nosedive on the corresponding period a year earlier. Sales slid by 14%, coming in at A$3.7m.

The company blamed the poor performance on a decline in contract winemaking revenue, a fall in gross profit margins due to industry conditions and slower growth than anticipated in packaged wine.

While the company was proud of an increase in packaged wine sales from 19,500 cases in 2004-5 to just under 25,000 cases in 2005-6, Simon Gilbert conceded that this was still "well below planned volumes of over 40,000 cases for the year".

In July, Simon Gilbert acquired a majority stake in premium producer Cassegrain Wines. The transaction had dragged on longer than the company had expected, resulting in "denying management the opportunity to implement a number of planned restructuring and cost-saving initiatives within the period", Simon Gilbert said.

"The difficult industry conditions are unlikely to abate quickly or over the coming 12 months, not withstanding some emerging signs that prices for bulk wines may be firming," said company MD Paul Pacino.

"Given this situation, the company's performance to date and the opportunities presented by the acquisition of Cassegrain Wines, management and the board have embarked on a program of initiatives to extract as many of the available benefits from the Cassegrain acquisition as quickly and effectively as is practical and to significantly reduce costs within both operations."