McGuigan wines producer Australian Vintage has reported its highest annual profits total for nearly a decade, contrasting markedly with the losses reported at rival Treasury Wine Estates.
It has become semi-customary over the past 10 years for Australian wine companies to warn of challenging conditions facing their industry.
Australian Vintage repeated the mantra in its financial results statement this week, reiterating that overall Australian wine exports are still falling year-on-year.
Against that background, the firm’s chief executive, Neil McGuigan, said he was ‘very pleased’ with a 49% increase in net profits for the year to the end of June 2014, to A$10.5m. That marks its best result since the firm changed its name from McGuigan Simeon to Australian Vintage in 2008.
The higher profits were largely fuelled by lower interest payments on debt. Australian Vintage’s net debt stood at A$118.8m at the end of its fiscal year, versus A$142.1m 12 months earlier.
Net sales also increased on the previous year, by 3% to A$214.8m, driven by stronger sales of bottled wine in the group’s native Australia and also in North America. Consumer demand for McGuigan branded wines helped to offset lower sales of bulk wines.
The figures differed sharply from those reported by Penfolds owner Treasury Wine Estates last week. An ongoing wine oversupply in the US and a slowdown in sales in China helped to drag Treasury to net losses of A$100.9m for its own financial year.
Australian Vintage said it currently expects profits for its current year to exceed last year, although this depends heavily on the size of the 2015 vintage and currency swings.
The firm said it expects to reap benefits from a distribution deal with CofCo in China. CofCo has a nationwide distribution network in Mainland China.
Written by Chris Mercer