Delegat raises profit outlook after record sales

Delegat Group, New Zealand’s largest listed winemaker, has lifted its operating profit guidance after a record year for case sales.

The Auckland-based winemaker, whose brands include Oyster Bay, is now projecting $38.5 million in net operating profit for the year ended June 30, up from $37m in 2016.

The company has achieved record sales of 2.656 million cases, it said, ahead of its targeted 9 per cent increase in global case sales to 2.632 million cases in the 2017 financial year.

The company previously forecast full-year operating profit to be in line with 2016’s record $37m, based on then-current exchange rates, although it said at the time that forex volatility makes it difficult to forecast financial performance.

Delegat has previously said that the numbers reported under conven- tional financial reporting standards don’t give enough insight into its performance as they don’t allow for fair value movements for its vines and grapes.

Yesterday the company forecast $2.2m in positive fair value adjustments for the year, which it expects to result in a reported profit after tax of $40.7m, from $54m in 2016.

In the first half, Delegat posted a 17 per cent gain in operating profit, which excluded one-time movements in asset valuations, to $24.7m on a 6 per cent gain in operating revenue to $135.8m. The bulk of Delegat’s first-half sales came from its distribution in its New Zealand, Canada, Asia and Pacific segment. Revenue and profit from Europe dropped in the first half, while they rose in the United States. Its full results are due in August.

The company’s shares closed up 20c yesterday at $6.70.