Australian Vintage Limited (AVL) has reported its results for the first-half of the 2023 financial year, with increases in net profit after tax (NPAT), earnings and market share.
AVL’s reported NPAT was $12.9m, up 29 per cent on last year’s first-half results, with EBITDAS at $28.3m, up 17 per cent. Chief Executive Craig Garvin said AVL’s strategy of focusing on its premium brands, Tempus Two, Nepenthe and Barossa Valley Wine Company was working for the business.
“Our result is in line with our expectations,” Garvin said.
“We have continued to grow market share. We have taken price in all key geographies despite the challenging global environment and the increased competition in Zero in ANZ. Our premiumisation strategy is working with Tempus Two, Nepenthe and the Barossa Valley Wine Company increasing by 2 per cent, 22 per cent and 4 per cent respectively, whilst McGuigan has declined by 11 per cent, in line with post Covid declines and our expectations.
“Total revenue of $137.1m has remained consistent with the revenue achieved last year. Our pillar brand contribution to revenue at 77 per cent is consistent with the prior year. As announced previously, gross margin is being impacted by high inflationary pressures, notably sea freight, delivering a margin of 29 per cent. Normalising for inflationary pressures and gross margin would have been 35 per cent.
“The sale and leaseback of our commercial vineyards Coldridge and Grande Junction, delivering $56.4m in revenue, $14.7m in after tax profit, and reducing our net debt to $53.1m (net debt/ rolling EBITDAS of 1.1 times) provides balance sheet surety. This transaction has increased our net tangible assets per share to $0.97, highlighting the conservative nature of our balance sheet.
“Our ESG strategy is well advanced with social and environmental impact now creating a balanced approach to planning and reporting of the business strategy. Key highlights include our premium owned vineyards being certified with Sustainable Winegrowing Australia, the business undertaking a packaging review to meet APCO 2025 packaging targets, and AVG being recognised and accredited as a Mental Health First Aid Skilled Workplace. Our employee engagement is top quartile and we’re promoting responsible enjoyment through a DrinkWise campaign in line with our leadership in no-and-low.
“We are on track to deliver to our guidance provided at the AGM to return an EBITS in line with FY22, subject to FX, agricultural risk and planned asset sales.”
In Australia AVL said that it has held market share, despite pressure from increased competition in the no-and-low alcohol category. It was this category that drove growth for AVL in the UK, where it grew market share by 44 percentage points.
AVL also said the upgrade of its Nepenthe cellar door is nearing completion and is expected to be finalized by the end of March 2023.