Sweet vintage
Delegat Group on track to repeat profit
Delegat Group, the country’s largest listed winemaker, lifted operating profit 17 per cent in the first half and is predicting annual profit to be in line with last year.
Profit excluding one-time movements in asset valuations rose to $24.7 million in the six months ended December 31, from $21.1m a year earlier.
Operating earnings before tax rose 22 per cent to $41.4m, on a 6 per cent gain in operating revenue to $135.8m. Global case sales rose 14 per cent, with the gain partly offset by unfavourable foreign exchange movements.
Delegat said that the numbers reported under conventional financial reporting standards “do not provide adequate insight into the group’s underlying operational performance, primarily due to a number of fair value adjustments that are required to be reported on”.
Net profit fell to $19.1m from $21.5m a year earlier as the company’s grapes and derivative financial instruments were written down by $7.7m, with total writedowns of $5.66m net of tax.
The company forecast full-year operating profit to be in line with 2016’s record $37m, based on current exchange rates, although it said forex volatility made it difficult to forecast financial performance.
“The results achieved in the six months to December 2016 are testament to the strength of the group’s business model,” it said. “The group is on target to achieve global case sales for the full year of 2,632,000, up 9 per cent on last year.”
Delegat invested $23m in the first half. It borrowed $10.3m in the period, taking net debt to $292m, up 3 per cent from June 30, 2016.
The bulk of Delegat’s sales still came from its distribution in its New Zealand, Canada, Asia and Pacific segment, with a 4.4 per cent lift to $144.2m in revenue though a 25 per cent drop in segment profit to $14.5m.
The company’s shares closed up 5c yesterday at $6.20.