Delegat Group, the New Zealand winemaker, has issued a profit warning, with lower-than-expected volumes on the horizon.
The company behind the Oyster Bay brand expects its operating net profit after tax to reach NZ$57-61m (US$35-37.4m) in the year to the end of June 2024.
When Delegat published its results for the 12 months to the end of June this year in August, it booked an operating net profit of NZ$59.3m, up 2% on a year earlier. The group then forecast its operating net profit in the new financial year would come in between NZ$62m and NZ$67m.
Delegat’s revised guidance has been driven by the prospect of lower sales volumes. The company now believes it will sell 3.6m cases in the current financial year – down 1.7% on last year and 5.5% lower than its August forecast.
“With supply chains stabilising, distributors and retailers have reduced inventory holdings resulting in lower replenishment orders for the year to date,” Delegat said in a stock-exchange filing.
Citing data from Circana for the 52 weeks to October, the company said Oyster Bay “continues to outperform the industry in the key US market”, with retail sales up 9%. Delegat said the category in which Oyster Bay competes – wines sold at US$10 and above – was “flat over the last 12 months”.
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Looking ahead, Delegat said it was “committed to growing profitability in key markets”, using price increases to offset inflation.
As a consequence, the business has reassessed its forecasts for case volumes in its 2025 and 2026 financial years.
In the 2025 year, Delegat believes it will sell just under 3.8m cases, some 4.4% lower than the company’s previous guidance.
The group forecasts it will sell 3.9m cases in the 2026 year, down 5% on its earlier prediction.