Australian Vintage (AVL) has reported its results for the first half of the 2024 financial year, with revenue in line with the prior year, while margin and underlying earnings have improved despite challenging trading conditions.
AVL said that it has seen continued improvement in its performance across key markets, which is consistent with its strategic plan. In Australia, despite strong competition in all segments AVL reported market share growth of two per cent, while the overall market declined by five per cent.
AVL said its super premium wines above $15 have grown by 11 per cent year-on-year versus a total market decline of one per cent. With its branded products retail scan sales for Tempus Two were up seven per cent, Nepenthe was up 20 per cent and Barossa Valley Wine Company was up four per cent on the prior year.
Despite increased competition, AVL said it remains the leading no-and-low wine supplier in Australia, delivering 15 per cent growth versus the prior year.
Chief Executive, Craig Garvin said: “Our result is in line with our expectations. Given the trading environment, and the challenging industry conditions, I am very encouraged we have been able to maintain revenue in line with the prior year and improve earnings in contradiction to industry trends.
“We have achieved margin and underlying earnings improvement as indicated at our AGM. Relentless focus on efficient brand investment, innovation and cost out measures have seen earnings and cash flow improvement.
“In our underlying results, EBITDAS of $16.5m and EBITS of $8.6m, are over $3m higher than the prior year, whilst NPATS of $4m, is almost double the prior year.”
He added: “We have invested $2m in transformational costs, including consultancy fees, redundancies and full market review as announced last year. As cost reductions occur, I am confident we are taking the right steps to improve performance in an extremely challenging market.
“We have continued to maintain, and improve, our market share across key geographies. Whilst the cask and private label business is challenging our branded business is in growth. We have grown in our emerging markets in Ireland and North America, whilst maintaining revenue in Asia.
“There are some strong, and encouraging, signals that China will commence re-ordering in Q4 of our financial year and we expect improved earnings from Asia in H2.
“We are the global leaders in no-and-low with our McGuigan Zero product number one in the UK, Ireland, Australia and NZ. In APAC our sales of no-low have increased by 15 per cent over the prior year. Our position is supported by our world leading technology and our customer facing innovation. We have launched Mid Strength on shelf in the UK and early signs are encouraging of consumer pull through.
“Our operating cash flow and free cash flow, pre asset sales and dividends, improved by $7.4m and $8.4m respectively over the prior period. Whilst this is an improvement we remain focused on a number of actions to reduce net debt. We are comfortable at this level as we process more wine in anticipation of higher F25 sales.”