Delegat forecasts record operating profit, case sales in '16

Delegat forecasts record operating profit, case sales in 2016 on growth in North America, Asia

By Sophie Boot

Dec. 1 (BusinessDesk) - Delegat Group, New Zealand’s largest listed wine company, forecast record operating profit and case sales for 2016 on growth in the North American market and in the Asia-Pacific region.

Operating profit is expected to rise 5 percent to $36 million in the year ending June 30, 2016, managing director Graeme Lord told shareholders at their annual meeting in Auckland. Sales are forecast to rise 8 percent to 2.4 million cases, he said.

Delegat, which is controlled by interests associated with the family of chairman Jim Delegat, has been growing through acquisitions in recent years, including Australia's Barossa Valley Estate (BVE) in 2013 and farmland in New Zealand for conversion to grape vines, while expanding existing facilities. Lord today reiterated the company's target of lifting sales to 3.2 million cases per year by 2020, primarily driven by 71 percent growth in North America, the "key growth region for the group", and a 36 percent increase for the Asia Pacific region.

"The group is well positioned to grow sales and achieve sustainable earnings growth in the years ahead," Lord said.

Sales volume in North America, where the group sells 40 percent of its wine, rose 16 percent this year to 888,000 cases in 2015. Lord said North America was the largest "super premium" wine market in the world, and the company has worked hard to establish its Oyster Bay range in the US and Canada.

Growth in the Asia Pacific region, including Australia and New Zealand, would be largely driven by BVE and sales into Asia, Lord said. Sales rose a lower-than-forecast 1 percent in 2015 because of the delayed re-launch of BVE, which the company bought out of receivership.

Debt rose 31 percent to $202 million after the company invested $80.6 million in vineyard development in New Zealand and the Barossa Valley. It plans to invest $101.9 million in 2016.

The shares were unchanged at $5.35, where they have remained since Nov. 24, and have risen 16.3 percent this year.

(BusinessDesk)

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