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)

BUDGET 2012:
Parliament Debate Live - Video Of Budget 2011
Keith Ng Interactive Graphic: How the Budget Breaks Down
BUDGET 2012 - FULL COVERAGE: Reports / Analysis - Press Kit - Reaction (from everybody) - Previews (from everybody) - Pre-Budget Announcements

Gordon Campbell: On the Budget’s Spreadsheet Victories

It wasn’t as if expectations were sky high, exactly. Chances are, it was always more likely that we’d be seeing Bigfoot rampage through the Beehive lock-up than catch a glimpse of a credible growth agenda from this government. More >>

Sludge Budget Report - Short The Dollar! MEMO: To international bankers FROM: C.D. Sludge Please short the dollar! It'll be good for both you and us. And you know you want to. Greexit, Eurogeddon... watch out... flight to quality and all that. Follow your instincts. The NZ Debt Management Office has been so surprised at the unprecedentedly low interest rates that it can borrow at that it has already entirely pre-funded the 2013 fiscal deficit - all $8 billion of it! More >>

Pattrick Smellie Comment: Doddling along the best we can hope forCriticising Budgets for lacking vision or imagination is like shooting fish in a barrel, but even so, this year's Budget again feels like a missed opportunity. Perhaps it's the intrusion of real world needs that means the government couldn't make better political use of the $558.8 million it expects to gather in its first partial asset sale. More >>