Delegat to pay bigger dividend after posting record annual operating profit
By Paul McBeth
Aug. 26 (BusinessDesk) - Delegat Group will pay a bigger dividend to shareholders after reporting a record operating profit for the 2016 financial year, with North American sales driving revenue growth.
The Auckland-based company's board declared a dividend of 12 cents per share payable on Oct. 14 to shareholders on the register on Sept. 30, up from 11 cents it's paid in the past two years. The winemaker reported a record operating profit of $37 million, on a 9 percent increase in global case sales to a record 2.41 million, including 1 million cases sold in North America.
"The directors consider that the underlying operational performance and strong cash flows justify an increase in dividends this year," executive chairman Jim Delegat said.
Delegat primed the market for the record result with guidance in June on the profit and sales figures, and the shares were unchanged at $6.10 at the market open.
Net profit, which includes unrealised movements in the fair value of the winemaker's vines and grapes, rose to $54 million, or 53.39 cents per share, in the 12 months ended June 30 from $32.5 million, or 32.16 cents, a year earlier. Delegat's vine assets increased in value by $7 million in the latest year compared to a $19.3 million gain in 2015, while the grapes appreciated $11.8 million, turning around a $10.4 million charge a year earlier.
Delegat projects case sales to rise to 3.4 million by 2021 and plans to grow sales 9 percent in 2017. If the kiwi dollar stays at current rates, 2017 operating profit is projected to be in line with this year's record performance and if it declines to the average through the 2016 financial year, earnings are expected to rise at the same pace as sales.
Operating cash flow rose to $42.5 million from $36.5 million, while the firm's investing cash outflow increased to $115.5 million from $72.6 million. Delegat secured a $350 million banking facility in 2014, and had net debt of $282.7 million as at June 30, up 40 percent from a year earlier.