By Clyde Mooney – editor Australian Hotelier
Releasing its results for FY2013 leading wine producer Australian Vintage (AVL) speaks of a year that was tough, but shows results from ‘strategic action’.
While net profit and sales were down, cost base was also reduced and EBIT up three per cent, with executive chairman Neil McGuigan (pictured) suggesting many of the savings benefits will not become apparent until FY14.
“Despite the difficult trading conditions, the comparatively small 2012 vintage and uncertain economic conditions, we maintained our profit and return to shareholders,” McGuigan stated in this morning’s ASX release.
“Over the last ten years, we have taken strategic action to address the global oversupply and market dynamics by reducing wine stock, buying and building brands, removing costs and dealing with excess production, packaging and winemaking facilities.
“We rebalanced the business to be flexible to meet the short term cyclical challenges but prepared for the upturn in industry conditions that we expect over the long term.
“All other things being equal, these factors, together with the recent weakening of the Australian dollar and our increased brand success, should improve margins and profitability in 2014 on branded product. However, non-branded bulk wine margins could be challenging."
AVL was recently awarded 2013 Winemaker of the Year at the International Wine Challenge, and McGuigan was voted 14th most admired wine brand in the world (Drinks International UK).
In the past year the McGuigan brand has grown 10 per cent, the Tempus Two brand by 26 per cent, and the ‘grief-easing’ Nepenthe brand by 18 per cent.
“The business has continued to reduce its cost base while running its core assets hard, and improving the reputation and value of its wines in a tough market and under tough economic conditions,” states AVL chairman, Ian Ferrier.
“The vintage is a credit to Neil McGuigan, his management team and all of the staff of Australian Vintage.”