Delegat forecasts record operating profit
Sales volumes in US expected to rise.
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Hawke’s Bay
The country’s biggest listed wine company Delegat Group [NZX: DGL] expects record operating profit and case sales for 2016 on growth in the North American market and the Asia-Pacific region.
Operating profit is expected to rise 5% to $36 million in the year ending June, managing director Graeme Lord told shareholders at their annual meeting in Auckland.
Sales are forecast to rise 8% to 2.4 million cases, he says.
Delegat, which is controlled by interests associated with the family of chairman Jim Delegat, has been growing through acquisitions in recent years.
These include Australia's Barossa Valley Estate (BVE) in 2013 and farmland in New Zealand for conversion to vines, while expanding existing facilities.
Mr Lord has reiterated the company's target of lifting sales to 3.2 million cases per year by 2020, primarily driven by 71% growth in North America, the "key growth region for the group", and a 36% increase for the Asia Pacific region.
"The group is well positioned to grow sales and achieve sustainable earnings growth in the years ahead," he says.
Sales volume in North America, where the group sells 40% of its wine, rose 16% this year to 888,000 cases. Mr Lord says North America is the biggest "super premium" wine market in the world, and the company has worked hard to establish its Oyster Bay range in the US and Canada.
Growth in the Asia Pacific region, including Australia and New Zealand, will be driven mainly by BVE and sales into Asia, he says. Sales rose a lower than forecast 1% in 2015 because of the delayed relaunch of BVE, which the company bought out of receivership.
Debt rose 31% to $202 million after the company invested $80.6 million in vineyard development in New Zealand and the Barossa Valley. It plans to invest $101.9 million in 2016.
Delegat shares were unchanged at $5.35 and have risen 16.3% this year.
(BusinessDesk)
Sophie Boot
Tue, 01 Dec 2015
Tue, 01 Dec 2015
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Delegat forecasts record operating profit
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