Montana strives to meet overseas wine demand

By DITA DE BONI

Wine volumes continue to fall short of export demand, but Montana Group is promising that a record harvest this summer will boost growth in the next full year.

The company released half-year results yesterday showing a 53 per cent rise in net profit to $17.6 million.

Montana Wines recorded pre-tax profit of $28.3 million, up 45 per cent, with revenue growing 19 per cent to $124.4 million.

Executive chairman Peter Masfen said Montana's wine business would enjoy higher turnover next year when increased volumes became available for export markets, notably Australia, Britain and the United States.

He said the company increased production every year by about 325ha, and that the business was on track to fulfil the 130 per cent volume growth over five years promised to shareholders at last year's annual meeting.

While domestic wine sales rose only marginally from last year, Mr Masfen said increased sales of high-value products such as Saints, Church Rd, Lindauer and Deutz Marlborough Cuvee had helped margins.

He said that had little to do with millennium or supermarket sales.

"The growth is definitely sustainable."

Capital expenditure looked set to surpass the year's earmarked $20 million, with the development of vineyards and new land purchases bringing the full year total to $25 million-$28 million, he said.

The company says the full-year profit is on track to reach $30 million. Profit for the second six months is not expected to dip below last year's $11.5 million.

With the results, Montana Wines announced that it had struck an agency agreement with Babich Wines for the local sale and distribution of that label, and had identified other small to medium labels to integrate into its sales and marketing operations.

The group's Truck Investments division reported pre-tax earnings up 104 per cent to $3 million, on revenue growth up 39 per cent to $50.6 million.

Mr Masfen said the result - "more of a recovery than a record result" - could be attributed to a pickup in Asian economies that had meant New Zealand industries such as forestry were back in the market for heavy-duty trucks.

He refused to comment on rumours that Montana would divest the truck division, but said the wine group had a consistent record of selling extraneous businesses.

Interim dividend of 3.5c a share was up 0.5c from last year.