By Jenny Ruth
Friday 10th December 2010 |
Text too small? |
Winemaker Delegat's reaffirming its profit guidance of between $23 million and $26 million for the year ending June, 2001 has caused Rob Mercer at Forsyth Barr to raise his forecast.
Mercer now expects a $25.5 million net profit, up from his previous $23.9 million forecast.
"We believe Delegat's is on track to achieve earnings towards the top end of its guidance," Mercer says.
That's despite trading conditions for export wine companies remaining challenging.
Delegat's 40% decline in EBIT (earnings before interest and tax) in the year ended June 2010 was mostly due to non-cash items, a 10% decline in averaged realised case price to $112.70 and a step-up in operating costs to support higher volumes, Mercer says.
Delegat's meeting his forecast $44.1 million EBIT for the current year would be well up on the $27.3 million achieved last year.
"The medium-term growth prospects remain substantial and there is further earnings upside from the current level to a global economic recovery," he says.
If the New Zealand dollar depreciates towards mean levels against the Euro and US dollar, that should further stimulate earnings.
"We believe the market has extrapolated an overly pessimistic view of Delegat's medium-term profit outlook based on perceptions of the wine industry," Mercer says.
Recommendation: Buy.
No comments yet
Delegat's posts 62 percent gain in annual profit as value of vineyards, grapes increase
Delegat's confirms jump in harvest, IFRS harvest gains to lift FY net profit
Delegat’s Group Limited
Delegat's buys Australia's Barossa Valley Estate assets out of receivership for A$24.7M
Delegat's lifts first-half profit, selling more wine while keeping expenses in check
Delegats expands in Hawke‘s Bay
Jim Delegat loses suit against director of Salthouse Marine
Delegat's sees small lift in annual earnings, warns on strong currency
Delegat's FY profit falls 22 percent on lower harvest, drop in sales
Delegat's first-half profit reaches a record before non-cash writedowns