Australian Vintage Limited (AVL) has reported a strong first-half result with revenue, earnings and profit all increasing and sales of its key brands McGuigan, Tempus Two, Nepenthe and Barossa Valley Wine Company (BVWC) up 20 per cent.
The company said that COVID-19 has had a “mixed impact” on the business with increased sales in some areas, but increased costs at production facilities through segregation of shifts and some challenges with supply chain operations. AVL also said it has minimal exposure to the China slow, while sales to other regions within Asia are up seven per cent.
The company reported net profit after tax was up 127 per cent to $13.3m, EBITS up 73 per cent to $20.3m and total revenue up $10.7m to $148.4m.
AVL’s Chief Executive, Craig Garvin said: “The result was very pleasing with continued growth in our portfolio of key brands. During the six-month period our pillar brands of McGuigan, Tempus Two, Nepenthe and BVWC grew by 20 per cent.
“This growth together with the efficiencies generated from our recent capital spend, investment in our people and the favourable 2020 vintage have underpinned the 127 per cent growth in NPAT. We are committed to our strategic plan and it is showing positive signs for our future.”
He added: “Whilst it is difficult to calculate the impact of COVID-19 on the business, our key strategies should continue growth post COVID-19. Innovation and consumer engagement is key to this growth, and we have seen this in our Australian and UK business where we are working hard with our customer partners to drive our portfolio.
“The McGuigan Zero range has been an outstanding success and demonstrated the importance of innovation to the portfolio long term. This, together with the $3.3m half year benefit from production efficiencies resulting from our recent capital expenditure and the improved 2020 vintage, is sustainable for the long-term future and not COVID-19 dependent.”
Australia and New Zealand performed well for AVL with contribution to the overall business result up 90 per cent to $7.5m. The McGuigan brand grew by 11 per cent, with McGuigan Zero outperforming expectation.
Sales of Tempus Two were up 33 per cent, Nepenthe grew by 18 per cent and BVWC grew by 160 per cent from a low base.
Looking ahead the company said: “The result for the six months to December 2020 is in line with the strategic plan as we leverage the past asset investments. As we invest in our key brands and people capability, we not only grow sales, but improve the mix of sales and drive an improved balanced scorecard for the long term.
“Whilst COVID-19 appears to have had an overall positive impact on our business, a significant portion of the growth in our half year result has come from long term sustainable strategies such as innovation, people capability, improved consumer trading technology and improved production efficiencies.
“As advised at the November 2020 Annual General Meeting the Company remains on target to achieve a full year net profit after tax of between $18.0 million and $20.0 million subject to no material change to current exchange rates, no further deterioration in the various economies due to COVID-19 and a normal vintage.”
AVL also said that the 2021 vintage is in process and early indications are that yields will be up on last year’s vintage.