Delegat first-half profit climbs on record sales volumes

By Paul McBeth

Feb. 25 (BusinessDesk) - Delegat Group lifted first-half profit 30 percent as it sold a record volume of wine worldwide as the northern hemisphere markets become increasingly important to the winemaker.

Net profit was $25.3 million in the six months through December, up from $19.4 million a year earlier. That included a bigger write-down in the fair value of Delegat's grapes than a year earlier and a turnaround in the valuation of financial derivatives.

Stripping out unrealised fair value movements, the winemaker's operating earnings climbed 17 percent to a record $31.4 million. This outpaced the increase in sales, which rose 13 percent to $141.4 million. The company sold a record 1.58 million cases of wine, a 14 percent rise from the previous year.

Sales to the UK, Europe and Ireland were up 31 percent at 469,000 cases, while North American sales rose 13 percent to 640,000 cases. Sales in Australia, New Zealand and the Asia Pacific increased 4 percent to 467,000 cases.

"The results achieved in the six months to December 2018 are testament to the strength of the group’s business model," executive chair Jim Delegat said in his report to shareholders. "Delegat Group is well positioned to pursue its strategic goal to build a leading global super premium wine company."

The winemaker stepped up its expansion with new vines in the ground last year and plans to plant 575 hectares in the current financial year.

It says it is focused on North America to drive its global growth. It is developing in-market sales teams to support a forecast growth to 3.38 million cases in the June 2021 financial year.

Delegat expects to sell 3.04 million cases in the year ending June 30, up 11 percent from a year earlier. It forecasts annual operating earnings of $50.3 million, a gain of 12 percent.

The company doesn't typically declare interim dividends.

Delegat shares rose 1.1 percent to $9.60, and have increased 23 percent over the past 12 months.

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