Delegat first half profit drops 18 pc, sticks to year forecast

NZX-listed wine exporter Delegat Group has reported its first half result. Photo / File

Wine exporter Delegat Group’s first-half net profit fell by 18 per cent to $33.4 million, due mostly to higher interest costs and accounting adjustments.

Revenue was mostly flat.

At an operating level - excluding the impact of fair value adjustments required under New Zealand accounting standards for grapes and derivative financial instruments - the net profit came to $37.8m for the six months to December, compared with $40.2m in the same period in the previous year.

Operating earnings before interest and tax were $62m, down $0.2m on the previous corresponding period.

The group maintained its 2024 operating profit guidance in the range of $57m to $61m.

Finance costs rose to $9.6m from $6.9m.

The company said with supply chains stabilising, distributors and retailers have reduced inventory holdings resulting in lower replenishment orders for the year to date.

As a result, revenue was down $0.2m on the same period last year primarily due to the impact of a 2 per cent decrease in global case sales, offset by favourable foreign exchange movements.

A total of $46.2m was paid for additional property, plant and equipment during the period, including vineyard developments in New Zealand, and development of the Hawke’s Bay and Marlborough wineries, which would provide earnings growth into the years ahead.

The company said it was well-positioned to fund its current operations as well as future capital investment in New Zealand and Australia.

The group’s net debt at December 31 amounted to $352.3m, an increase of $46.5m compared with the last half-year - within the group’s long-term bank debt facilities of $420m.