By Andy Young
Australian Vintage Limited (AVL) has posted a net profit after tax of $3.6 million for the six months to 31 December 2015.
AVL's chief executive Neil McGuigan said that branded sales helped to increase its profit, which is up 80 per cent on the prior period.
"Branded sales continue to grow, with McGuigan, Tempus Two and Nepenthe sales up 26 per cent," McGuigan said. "For the six months to December 2015 these three brands made up 65 per cent of our total sales, compared to 56 per cent for the same period last year. Cash flow from operating activities improved by 34 per cent to a positive $11.3m."
In emphasising the difference that branded bottle sales have made to the business, McGuigan said that 10 years ago, in the six months leading up to December, branded bottles accounted for 39 per cent of the company's total sales. This year that figure is 82 per cent.
McGuigan added: "Our strategy to focus on growing our export business, increasing sales of our brands and a focus on cost control has seen this company evolve from a bulk wine producer to a branded wine business."
Overall AVL's revenue for the period increased by seven per cent, again driven by branded sales. Although low margin UK/Europe bulk sales were down by $4.7m, the McGuigan brand is currently the fourth biggest global wine brand in the UK.
Australasia/North America packaged sales increased by $6m to $57.4m, due to increased sales of the McGuigan brand, which was up by 32 per cent, although this was partially offset by a 21 per cent drop in cask sales.
Speaking about the company's outlook, AVL chairman Richard Davis said: "Global industry conditions still remain challenging. However, with the lower Australian dollar and the recently signed trade agreements we are seeing signs of improved conditions in the wine industry.
"For the next six months we expect the Australian dollar to be higher against the GBP than the first six months. The company has also experienced a slowing down of cask sales and a delay in bulk sales. As a result some higher priced 2014 vintage wine will be sold in the next six months."
And finally, speaking of this year's vintage, Davis added: "The 2016 vintage has started and the early signs are encouraging. We are seeing yields down in some regions and up in other regions. Quality seems very good.
"Subject to normal 2016 vineyard yields and forecast foreign exchange, we remain confident that our 2016 net profit before one-off items will be up by 10 to 15 per cent on last year's $7.1m net profit after tax and before one-off items."