US: Vincor posts record sales for Q3
Vincor has reported a record increase in Q3 sales in its 2004 fiscal year. For the three month period ended 31 December 2003, Vincor reported an 8.6% increase in net sales and a 7.5% increase in net income year-on-year.
Net sales in the quarter were a record $134.7 million and net income was $15.9 million, or $0.58 a share on a diluted basis. This compares with net sales of $124.1 million and net income of $14.8 million, or $0.54 a share on a diluted basis, reported in the third quarter of fiscal 2003.
In aggregate, the translation effect of the strengthening Canadian dollar against the U.S. dollar reduced net income by $0.4 million, or almost $0.02 per share.
During the quarter, increases in sales volume were achieved in Vincor's core wine brands with shipments of Toasted Head growing by 81%, Jackson-Triggs by 20% and Hogue by 3% compared to the third quarter of fiscal 2003. Overall, sales volume for Vincor in Canada increased 5.7% while Vincor in the USA grew by 23.5% - both stronger than their respective markets. Sales volume of Vincor's Goundrey Wines of Australia and New Zealand's Kim Crawford Wines, acquired on November 1, 2002 and May 15, 2003, respectively, continued to perform well and generate strong growth.
Taken as a whole, the aggregate sales volume of Vincor's portfolio of premium wines grew by 17% compared to the same quarter last year.
Net sales for the nine month period ended 31 December 2003 were a record $362.5 million and net income was $39.5 million, or $1.43 a share on a diluted basis. This compares to net sales of $333.3 million and net income of $34.2 million or $1.25 a share on a diluted basis reported in the prior year.
In Canada, shipments of Vincor's core wine brands were ahead in all regions with the greatest gains in English Canada, which was up by 10.9% over the same period last year. In the United States, sales growth was offset by promotional programs that were implemented to respond to competitive market conditions.
During the quarter, the overall growth trends (measured by volume) in key wine markets have continued: the market for premium wine grew by 5% in Canada, 4% in the United States and in Australia, while the overall market grew by 2% the bottled wine segment rose 6.5%. The company believes that this long-term trend is demographically driven as populations age and enter their prime wine consuming years above age 40.
In a statement, president and CEO Donald Triggs said: "Both our sales and the overall key markets for premium, New World wine grew steadily. During the quarter we continued to implement our strategy of distributing our key premium branded wines across our growing distribution network.
"Quarterly sales progress in the United States was accompanied by higher levels of promotional spending that we implemented to respond to competitive market conditions. However, given the continued growth of wine consumption in the U.S., combined with the reduced harvest last fall in California and the declining U.S. dollar, we expect the high levels of industry-wide promotional spending to ease over the next six to twelve months."
Vincor's strategy of introducing its portfolio of key brands across its distribution network advanced during the quarter as the company gained listings for Goundrey Wines in British Columbia and Alberta, with listings in Ontario commencing in January, 2004. Additionally, Kim Crawford Wines have been introduced into Vincor's Australian sales network.
The company said that the 2004 harvest is progressing in Australia and New Zealand and preliminary reports suggest that it will be of excellent volume and quality. The crush from this harvest will take place in March with some of the white wines coming available later in 2004 and the reds coming available in 2005 and 2006.
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