DB result raises spirits all round

By DITA DE BONI

DB Group shareholders received a double dose of good news when the company voted to return $151 million to stockholders and announced a positive earnings result for the year to September.

The $151.3 million payout is the price Montana paid for DB's wine division, Corbans. It will be achieved in a two-for-one share cancellation approved by DB shareholders at the annual meeting in Auckland yesterday.

Once the cancellation is approved by the High Court, the money should find its way to shareholders early next year.

Meanwhile, the group's results showed the effect of big restructuring and the sale of non-core assets. The company reported a pre-tax profit of $47.3 million, an increase of 21 per cent on last year, with a net profit of $23 million, up 96 per cent on last year's $11.7 million.

The group is also "essentially debt free" and would be able to finance future investment from cash balances, cash flows and specific project funding. It owed $35.9 million at the same time last year.

Over the year, the group has slashed staff from 1280 to 500, and reduced assets from $372 million to $185 million. While costs have come down, the business also received a fillip from the America's Cup, millennium celebrations and the introduction of beer into supermarkets.

Managing director Brian Blake said the group was selling around 20 per cent of its packaged beer into supermarkets, and that was expanding four of DB's premium brands - Heineken, Tui, Monteith's and Export Gold - despite a flat beer market overall.

He said it was difficult to know how much of a financial impact the major events had had on DB, but 40,000 hectolitres more beer had been taken into supermarkets to stock shelves before December 1.

"The good result was [also] assisted by the relative stability of the market, allowing the company's products to be sold at better margins than has been possible in the past five years."

Prices had remained stable in the market, despite increased competition, he said.

Unusual items, which last year cost the company $26.4 million from write-downs of the company's brewing assets and the restructuring of Allied liquor stores, were greatly reduced to just $6.3 million - mostly from a writedown in retail stores and some property assets.

While wine and beer sales gained in the year, the loss of an estimated $130 million sales through the discontinued liquor division reduced the revenue by 16.9 per cent, from $637.6 million last year to $530.2 million.

A final dividend of 16c a share will be paid once the two-for-one cancellation has been approved.

DB Group shares gained 5c to close at $3.35 yesterday.