The Australian winemaker BRL Hardy, which is poised to merge with Constellation Brands of the US, today reported a 17% rise in 2002 profit as its US joint venture with Constellation, Pacific Wine Partners (PWP), continued to perform well. Net profit reached A$84.3m for the year.
PWP’s success, driven by brands such Blackstone and Banrock Station, offset reduced earnings growth in the UK and at home, and analysts believe it will have increased the chances that BRL shareholders will accept Constellation’s bid for the business, when they meet later this month.
BRL Hardy managing director Stephen Millar also said that he expected double-digit profit growth of around 15% to continue this year even after any takeover.
“We’re very comfortable with that position for 2003,” Millar said. He also said he believed that earnings would improve into 2004, because margins on wines are expected to improve.
PWP saw its earnings jump to A$28.7m from A$1.8m a year earlier. But tough conditions in the UK, with poor margins after price cuts, saw earnings there grow only 1.8% to A$65.2m. Millar said the outlook for 2003 is for similar trading conditions but with no further erosion in margins in Australia or the UK.
Millar said that although the prevailing Australian drought would reduce the 2003 vintage by around 20%, BRL Hardy’s record 2002 crush would cover any shortfall.
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BRL Hardy’s results are in stark contrast to its leading competitor Southcorp which has seen its shareprice plummet recently afer unveling a 97% fall in profits. However, Millar said he believed Southcorp would continue to be a tough competitor.
