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Foley Family Wines turns to first-half loss on Kaikoura quake costs, falling sales

Wednesday 1st March 2017

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Foley Family Wines, whose brands include Vavasour and Martinborough Vineyard, turned to a loss in its first half as it battled falling wine sales and the aftermath of last year's Kaikoura earthquake.

The net loss of $323,000 in the six months to Dec. 31 compares to a $1.6 million profit a year earlier. Revenue dropped 5.4 percent to $16.6 million, with bottled wine sales down 15 percent to $14 million. Case sales dropped 17 percent to 179,000 dozen, with the Australian and New Zealand markets accounting for 90 percent of the decrease, it said. The strong New Zealand dollar, particularly against the British pound, also had a material impact.

FFW warned investors of a challenging period ahead in November, after the earthquakes caused significant damage to storage tanks at its Grove Mill winery in Marlborough, with some bulk wine lost. The company booked a $989,000 cost from the insurance excess, turning a first half net profit into a reported loss, it said. The winery will be repaired in time for the 2017 vintage. 

"The last six months have been extremely challenging for the company, besides the actual damage inflicted by the earthquake, getting the winery operational has been very distracting for our small team," chief executive Mark Turnbull said. "The currency has compounded the problem of profitability of some markets and with a large vintage in 2016 many businesses are not in a position to increase pricing. We are determined to have a much stronger second six months and return the company to a growth path."

The NZAX-listed shares last traded at $1.50, up 5.6 percent in the past year.

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