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Delegat's FY profit falls 22 percent on lower harvest, drop in sales

Wednesday 29th August 2012

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Winemaker Delegat's Group's full year profit fell 22 percent after higher rainfall and cooler than usual growing conditions resulted in a lower harvest and drop in sales.

Profit decreased to $25.5 million in the 12 months ended June 30 from $32.7 million a year earlier, the Auckland-based company said in a statement. Sales slipped 6 percent to $221.6 million. The 2012 harvest fell 20 percent to 20,290 tonnes. Operating profit of $25.6 million beat its December guidance of earnings between $20.5 million and $24 million.

The winemaker said it is on track to achieve sales of 1.9 million cases in the 2013 financial year, up from 1.8 million this year.

Delegat's said its key growth markets for 2013 will be in North America, Australia, New Zealand and the Asia Pacific. It will continue establish Oyster Bay as one of the worlds "super premium" wine brands.

"The Oyster Bay brand continues to gain momentum in the important growth markets of United States and Canada," chief executive Jim Delegat said. "The group will continue its strategy of identifying 'value growth markets' and 'growth markets' which has proven successful and continues to deliver improved profitability, despite currency headwinds."

The wine industry has suffered from the high New Zealand dollar and duty and tax increases, especially in the United Kingdom. It's also been hampered by an over-supply of sauvignon blanc grapes since the 2008 harvest. Delegat's has previously said it expects this to continue for at least another two years.

The shares were unchanged at $2.95 yesterday, and have gained 26 percent over the past six months. The stock is rated an average 'outperform' based on the consensus of three analyst recommendations compiled by Reuters.

The directors declared a fully-imputed final dividend of 9 cents per share, payable on Oct. 12, up from 8 cents last year.

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