The Australian wine group, Southcorp, saw its shares plummet after it warned that it would record a net loss for 2002/2003 and would not be paying a final dividend. The company said profits had been hit by an unsuccessful sales promotion campaign in the UK.
The profit warning is the latest in a series to have been issued by the company which owns the Penfolds, Lindemans and Rosemount brands.
The company’s shares, which had been temporarily suspended last week as speculation grew that it was poised to issue a profit warning, fell by 23% to A$2.85 when trading resumed, closing down 16.4% at a seven-year low of A$3.10.
John Ballard, who took over as chief executive two weeks ago, refused to be drawn on when he thought the company would return to profit. But this warning is seen as worse than expected and follows a 97% fall in first quarter profits.
Ballard, who called Southcorp’s performance “unacceptanly poor”, now predicts a full year pre-tax loss of A$12.8m (US$8.3m).
It is the latest in a series of announcement which have staggered the Australian industry since Southcorp has such hitherto iconic brands as Penfolds, Lindemans, Rosemount and Wynns. These were not being run as premium businesses, Ballard said.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataBehind the latest announcement were domestic sales volumes forecasts down 10% for 2003. Meanwhile sales to the key European, including UK, markets are to fall more than 15%, with the UK itself down 23%. Second half European sales will be down as much as 40% because of working out excess stock in trade.
