Delegat profit slumps 99% on write-downs

Delegat profit slumps 99% as it writes down value of vines and grapes

Aug. 27 (BusinessDesk) – Delegat’s Group, the listed winemaker and international marketer, profit slumped 99% after it wrote down the value of its vines and grapes $11.8 million.

Net profit was $177,000, or 0.18 cents a share, in the year ended June 30, compared to $30 million, or 30.05 cents a share, a year earlier. Earnings before interest tax appreciation and depreciation plunged 71% to $12.1 million.

Pointing to tight conditions for next year, chairman Jim Delegat said the company achieved record global sales of 1,950,000 cases and a record sales revenue of $219.7 million. Its cash from operations was another record at $48 million and net debt reduced by 7% to $129 million. It will pay a dividend of eight cents a share.

“The key value growth markets are the United Kingdom and Ireland,” Delegat said. “In these markets the group is primarily focused on increasing profitability rather than growing sales volume. Profitability in these markets had been eroded by the sustained weakness in the pound sterling and euro currencies.”

Delegat said planned price increases, along with increased duties and taxes, would cover sales volumes going forward, but would increase profitability in their value growth markets.

Oyster Bay Marlborough Vineyards Ltd, 55% of which is owned by Delegat, posted net loss of $841,000, compared to a profit of $1.5 million in the previous period.

New Zealand’s wine sector has come under increased pressure over the last two years, with a swathe of receivership, as falling demand as a result of the global recession and a drop in the price of grapes after bumper crops in 2008 and 2009 put pressure on the sector.

The company said the outlook for New Zealand’s wine industry is improving as the supply imbalance normalized, with a total of 266,000 tonnes of grapes harvested this year, down 7% on the previous year.

Delegat’s 2010 harvest of 21,945 tonnes was 10% below the previous year and positioned the group well with regard to inventories for the forthcoming financial year, Delegat said.

The company said it was looking to continue to develop the value of the Oyster Bay brand in Australia, North America, and the wider Pacific region.

Delegat shares rose 0.6% to $1.61, while Oyster Bay shares were unchanged at $1.55.

(BusinessDesk)

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