Delegat's operating profit rises 6% to record

Delegat Group, New Zealand's largest listed winemaker, reported a 6 percent gain in operating profit to a record and said it expects to achieve at least as much in the 2018 year, subject to foreign exchange movements.

Operating profit was $38.5 million in the 12 months ended June 30, meetings its July 17 guidance, from $36.2 million a year earlier, the Auckland-based winemaker said in a statement. Sales rose 3 percent to $247.7 million as the volume of sales increased 10 percent and the value fell 7 percent. Of the drop in value, 4 percent related to foreign exchange movements and 3 percent to the company's unlying price/product mix, it said.

Delegat, whose brands include Oyster Bay, had a record New Zealand harvest in 2017 of 34,595 tonnes, up 4 percent from a year ago, while its Barossa Valley harvest in Australia rose 6 percent to 2,760 tonnes. The company is projecting sales growth in each of the next five years, with 2018 case sales seen rising to 2.78 million from 2.66 million in 2017 and reaching 3.69 million in 2022.

The biggest growth is expected out of the North American market, where it achieved sales of 1.1 million cases in 2017 and expects to almost double that to 2 million in 2022. Sales in the UK, Ireland and Europe are expected to decline to 680,000 cases in 2018 from 736,000 in 2017 and to be 725,000 in 2022, while sales to Australia, New Zealand and Asia-Pacific are seen rising to 798,000 cases in 2018 from 785,000 in 2017 and reaching 913,000 cases in 2022.

"Based on budget exchange rates, the group forecasts a 2018 operating profit result at least in line with this year's record performance," the company said.

Delegat declared a dividend of 13 cents a share, up from 12 cents last year. The payment will be made on Oct. 13 with a record date of Sept. 29.

Net profit fell 15 percent to $40.7 million, mainly reflecting an 82 percent drop in one-time gains in the value of its grapes and derivatives compared to the year-earlier period.

The shares rose 0.7 percent to $6.90 and have gained 18 percent this year.

(BusinessDesk)