Delegat wine sales rise to a record

Delegat Group [NZX: DGL], New Zealand's largest listed wine company, has boosted first-half operating profit 5% as wine sales rose to a record.

Profit excluding one-time movements in the value of its assets rose to $21.5 million in the six months ended December 31, from $20.5 million in the year-earlier period, the Auckland-based company said in a statement.

Net profit almost doubled to $19.2 million, or 18.95c  per share, from $9.8 million, or 9.67c, the year earlier as the company's vines, grapes and derivative financial instruments were written down by $2.3 million, compared with a $10.7 million writedown in the year earlier period.

Delegat is expanding its vineyards and targeting increased exports as it seeks to build a leading global "super premium" wine company with its Oyster Bay and Barossa Valley Estate wine brands. It spent $55.9 million investing in property, plant and equipment in its vineyards in the first half of this financial year, up from $34.3 million in the same period a year earlier.

"Delegat Group is well-positioned to pursue its strategic goal to build a leading global Super Premium wine company and deliver sustainable earnings growth in the years ahead," executive chairman Jim Delegat said.

The company increased case sales of wine 12% to a record 1,267,000.

Its North American market took 12% more cases to 476,000. Case sales rose 8% to 407,000 in Australia, New Zealand and the Pacific and 17% to 384,000 in the UK, Ireland and continental Europe.

Delegat said it's on track to increase full-year case sales 8% to 2,379,000.

The company reiterated its previous forecast for a 5% increase in full-year operating profit to $36 million.

In the first half, revenue increased 23% to $140.3 million.

Operating revenue, which excludes one-time fair value adjustments, increased 19% to $128.6 million. Operating expenses rose 26% to $38.2 million as a weaker New Zealand currency made its overseas investments in sales and marketing more expensive.

Its shares last traded at $5.93 and have gained 29% the past year. The stock is rated a 'hold' according to three analyst recommendations compiled by Reuters.

(BusinessDesk)