Company News
27 August 2008: Australia’s third largest winemaker today reported an EBIT turnaround of $13.9 million with a profit after tax and before significant items of $5.5 million.After significant items, net profit after tax improved by $7.3 million.“This is a strong turnaround for Australian Vintage in what must be the most challenging conditions ever experienced in the Australian wine industry.” Chairman, David Clarke said today. “I am particularly pleased that we delivered on the undertakings we gave the market last year and again at the half year.”“Basically Dane Hudson and his team have focused hard on profit versus sales. They took a conscious decision to build new and existing brands at the expense of commodity wine. At the same time they reduced costs and put the company in a stronger position by restructuring its asset base.“The result is even more creditable given the recent announcements by industry participants. It shows that Australian Vintage Limited recognised the issues in the international wine market and took decisions about grape intake and other assets early in the cycle.CEO, Dane Hudson said Australian Vintage has weathered the industry challenges by sticking to its strategic priorities. “Pressure had been applied to all producers with demand for Australian wine softening during the year and the higher than expected vintage last year. “Regardless of the softening demand for Australian wine, our total branded sales rose 10 per cent on higher margins and exports of branded wine improved 22 per cent.“Domestically we focused on shifting the mix of sales to new higher priced ranges. We were very pleased with the performance of the rebadged McGuigan Black Label range that grew 17% and the solid contributions of Nepenthe and Tempus Two.“We have also restructured our asset base, selling Griffith and Hunter Valley assets yielding $20 million. The Loxton Winery sale should be completed next month delivering an additional $60 million in cash. Additionally, tight management reduced our winery costs by $3 million versus last year. This has resulted in a significant turnaround in the margins we make on contracted wine sales and processing.“Operationally we have made strong improvements along the entire supply chain and now have a very effective system that is delivering real cost benefits and higher service levels to our major customers.“We continue to apply FMCG principles to our product development. In the past nine months we’ve launched three new products in Australia and they are showing pleasing early orders. “The industry headwinds will continue with the Australian dollar at a high level, ongoing drought conditions and structural oversupply in the Australian market. We expect 2009 to be particularly tough as the industry works through the imbalance in the Australian market. However, provided there is no material worsening of conditions we will continue executing our strategic priorities that will ensure the business can meet the long term growth aspirations and expectations of shareholders.”Outlook“We face an uncertain 12 months,” said Mr Clarke. “The outcome and implications of competitor restructurings and asset sales will impact the industry in the short and medium term.“Water availability remains an issue.“We anticipate that the market will continue to be volatile with softening demand for wine in Australia, and fierce competition in all of our markets. The economic conditions in the UK, in particular, and the US are also likely to impact demand.“We are confident that we can manage the business through these conditions and that the business can continue to perform.”“Notwithstanding the uncertainties, Australian Vintage is expecting a small growth in our operating profit for the 2009 full year subject to no further material change in conditions,” he said.- ENDS -Further information: David Clarke Dane Hudson Mike Noack Chairman Chief Executive Officer Chief Financial Officer 02 8232 3413 02 8345 6323 08 8172 8333 For all releases, results and presentations, please click here.
27 August 2008: Australia’s third largest winemaker today reported an EBIT turnaround of $13.9 million with a profit after tax and before significant items of $5.5 million.
After significant items, net profit after tax improved by $7.3 million.
“This is a strong turnaround for Australian Vintage in what must be the most challenging conditions ever experienced in the Australian wine industry.” Chairman, David Clarke said today. “I am particularly pleased that we delivered on the undertakings we gave the market last year and again at the half year.”
“Basically Dane Hudson and his team have focused hard on profit versus sales. They took a conscious decision to build new and existing brands at the expense of commodity wine. At the same time they reduced costs and put the company in a stronger position by restructuring its asset base.
“The result is even more creditable given the recent announcements by industry participants. It shows that Australian Vintage Limited recognised the issues in the international wine market and took decisions about grape intake and other assets early in the cycle.
CEO, Dane Hudson said Australian Vintage has weathered the industry challenges by sticking to its strategic priorities. “Pressure had been applied to all producers with demand for Australian wine softening during the year and the higher than expected vintage last year. “Regardless of the softening demand for Australian wine, our total branded sales rose 10 per cent on higher margins and exports of branded wine improved 22 per cent.
“Domestically we focused on shifting the mix of sales to new higher priced ranges. We were very pleased with the performance of the rebadged McGuigan Black Label range that grew 17% and the solid contributions of Nepenthe and Tempus Two.
“We have also restructured our asset base, selling Griffith and Hunter Valley assets yielding $20 million. The Loxton Winery sale should be completed next month delivering an additional $60 million in cash. Additionally, tight management reduced our winery costs by $3 million versus last year. This has resulted in a significant turnaround in the margins we make on contracted wine sales and processing.
“Operationally we have made strong improvements along the entire supply chain and now have a very effective system that is delivering real cost benefits and higher service levels to our major customers.
“We continue to apply FMCG principles to our product development. In the past nine months we’ve launched three new products in Australia and they are showing pleasing early orders.
“The industry headwinds will continue with the Australian dollar at a high level, ongoing drought conditions and structural oversupply in the Australian market. We expect 2009 to be particularly tough as the industry works through the imbalance in the Australian market. However, provided there is no material worsening of conditions we will continue executing our strategic priorities that will ensure the business can meet the long term growth aspirations and expectations of shareholders.”
Outlook
“We face an uncertain 12 months,” said Mr Clarke. “The outcome and implications of competitor restructurings and asset sales will impact the industry in the short and medium term.
“Water availability remains an issue.
“We anticipate that the market will continue to be volatile with softening demand for wine in Australia, and fierce competition in all of our markets. The economic conditions in the UK, in particular, and the US are also likely to impact demand.
“We are confident that we can manage the business through these conditions and that the business can continue to perform.”
“Notwithstanding the uncertainties, Australian Vintage is expecting a small growth in our operating profit for the 2009 full year subject to no further material change in conditions,” he said.
- ENDS -
Further information: