McGuigan wines producer Australian Vintage has warned that it is facing a difficult 2014 vintage, but the firm has been buoyed by a rise in profits in the first half of its financial year.
Yields across several regions are likely to be down in the current harvest as a result of the extreme weather during the growing season, Australian Vintage said in its half-year results.
Early harvest reports are generally good in some regions, notably Margaret River and parts of Hunter Valley, but the country-wide picture at this stage is that ‘the 2014 vintage will be very challenging’, the McGuigan wines producer said.
‘There are signs that the frost, disease and heat will impact on vineyard yields,’ said the group, although it said it is too early to predict final crop levels.
A smaller harvest might not be the worst situation for an Australian wine industry still dealing with pockets of oversupply and falling exports.
Australian Vintage said the country’s 2013 harvest was ‘in excess of demand’, with around 1.25m litres of wine produced.
As a company, Australian Vintage saw net sales for the six months to the end of December fall by 4% on the same period of the previous year, to A$108.4m. Higher bottled wine sales in Australia and North America, as well as a more favourable currency exchange, were dented by declines in the UK, Europe and Asia, and especially bulk wine sales.
Many Australian wine firms have seen their profits come under pressure in recent years, but lower interest charges related to reduced debt saw Australian Vintage’s half-year net profits increase by 21%, to A$4m.
Half-year operating profits, which chart earnings before interest and tax, slipped by 5% to A$11.3m, but the firm said profitability improved in many business areas.
Written by Chris Mercer