Foley Family full-year operating profit more than doubles, as bottled, bulk wine sales rise
By Joshua Riddiford
Aug. 31 (BusinessDesk) - Foley Family Wines, which is controlled by American billionaire Bill Foley, said full-year operating earnings more than doubled on increased sales of bottled wine in Australia and New Zealand, and a "modest" profit from a growing pool of bulk wine.
Operating earnings before revaluations and tax rose to $3.5 million in the 12 months ended June 30, from $1.2 million a year earlier, the Blenheim-based company said in a statement. Sales jumped 20 percent to $37.2 million, outpacing a 12 percent gain in expenses, excluding interest, to $32 million. Net profit dropped 62 percent to $1.2 million, on valuation adjustments to financial assets and harvested grapes.
The winemaker, which has vineyards in Marlborough and Martinborough and links to wine distributor Eurovintage, lifted total sales of bottled wine by 4 percent to 396,000 cases last year, for a net realisation that rose 4.4 percent to $71 a case. However, sales of bulk wine also soared as a result of the record 2014 vintage, which it said was "challenging" for the whole industry, and resulted in a price for bulk wine falling below $3 a litre. In total, it sold the equivalent of 91,557 cases as bulk wine in 2015, up from 55,000 cases a year earlier.
"We were pleased that all bulk wine sold was at a profit, albeit a modest one," the company said. "The decision to sell excess bulk was considered to be the best course of action rather than heavily discounting packaged wine, which may have otherwise led to devaluing the brands."
The 2015 vintage saw 5,300 tonnes of grapes harvested, down 22 percent from 2014's record 6,807 tonnes. The company didn't give specific guidance for 2016, saying a smaller vintage typically results in higher costs. Still, the company said it had a positive response in the US to new packaging for its Clifford Bay brand, while Boatshed Bay had "gained momentum" in Australia after tweaks to packaging.
The company also expects to see a pickup in sales of Martinborough Vineyard wines and lower costs resulting from its $2.2 million warehouse at Grove Mill. Along with other New Zealand exporters, it will also benefit from a 23 percent decline in the kiwi dollar against the greenback in the past 12 months.
The company's shares, which are listed on the NZAX, were unchanged at $1.40, valuing the company at $73 million.