Delegat lifts first half profit by 2 per cent, no major damage from Gabrielle

Wine company Delegat Group has reported is first half result. Photo / File

Wine export company Delegat Group said improved sales drove a 2 per cent lift in its first half profit of $40.2 million.

The company said it was fortunate to have not suffered significant damage from Cyclone Gabrielle, which caused widespread havoc across Hawke’s Bay earlier this month.

“The winery and vineyards, while incurring some surface flooding, have not been significantly affected,” the company said.

Delegat achieved operating revenue of $198.8m, up 11 per cent, on record global case sales of 1,970,000 in the six-month period.

Revenue was also boosted by the favourable impact of a 4 per cent increase in global case sales, price increases implemented in the United Kingdom, Ireland and New Zealand, and a favourable foreign exchange impact.

“While there remain ongoing global economic pressures, Delegat Group’s strategy of expanding its winery and vineyard assets, combined with significant investment in in-market distribution and its brands, continues to pay off,” managing director Steven Carden said.

During the half-year Delegat Group purchased a previously leased vineyard in Marlborough for $39.9m and invested $30.8m in new vineyard developments and winery expansion to provide for future revenue and earnings growth.”

Operating expenses are $6.2m higher compared to the same period in the previous year, largely due to foreign exchange, the resumption of normal sales and marketing activities after Covid-19 disruptions, and one-off software costs of $1.2m for upgrading a core software system.

“Despite the significance of Cyclone Gabrielle to the Hawke’s Bay, Delegat remains on track for a successful harvest in the region, commencing around the end of February.”

Delegat’s Hawke’s Bay winery and vineyards have not been damaged significantly by the cyclone.

Delegat said the group is on target to achieve global case sales for the full year to June 30 of 3,649,000 cases, which would be up 9 per cent on last year.

“Based on the prevailing exchange rates, the group forecasts the 2023 operating profit guidance in the range of $59m to $62m,” it said.

Delegat’s shares last traded at $9.22, having dropped by 31.6 per cent over the last 12 months.