Montana has healthy profit jump

By Phil Boeyen, ShareChat Business News Editor

Monday 19th February 2001

The controversy surrounding the battle for control of Montana (NZSE: MON) has had to take a backseat meantime to the company's interim profit increase of nearly 11% to $19.5 million.

In the six months to December the wine company grew its earnings before interest and tax by 20% to $33.9 million, including three months of trading from its Corbans purchase.

In the domestic market chairman Peter Masfen says the company achieved greater profits despite static volumes, with more premium wines being sold compared with the previous period.

He also says the addition of the Corbans brand portfolio has further strengthened the company's market share in the latter part of the report period.

"The new brands acquired, particularly Corbans, Stoneleigh and Longridge, will place the company in a strong position to maximise its market presence in future years."

Export sales to the UK and Australia have continued their growth pattern of recent years and Europe and the US have increased markedly.

"While Australia is still Montana's biggest export market after the UK, the US market is proving very profitable. Its growth is being restrained only by lack of wine resource."

Export returns have also benefited from the relative weakness of the New Zealand dollar. Sales revenue for the period rose from $124 million to $173 million and a 5 cents per share dividend will be paid.

The winemaker says with new vineyards coming into production it is expecting a record harvest of premium varietal grapes for the 2001 vintage.

Although the Hawkes Bay harvest will be down on last year because of unseasonal frost over the flowering period, the Marlborough vintage is expected to far exceed last year's, especially in terms of Sauvignon Blanc. The yield in Gisborne is likely to be similar to last year's.

Commenting on the recent takeover battle for the company, in which Lion Nathan (NZSE: LNN) ended up with a majority stake, Mr Masfen says it has highlighted the director's view that Montana is one of the very best of New Zealand companies and has outstanding prospects in future years.

"This flows from growing consumer demand for our premium wines and our significant investment in new resources, as we seek to have more premium wine to sell."

"Notwithstanding Lion's purchase of the 51% shareholding, 49% of the capital of Montana is owned by approximately 8,000 shareholders (mainly New Zealand shareholders), including myself. Together with our board of directors I am committed to serving the interests of all shareholders of the company."

Mr Masfen says the future outlook for Montana is exciting, and the recent PricewaterhouseCoopers report on the company highlighted a five-year financial forecast which puts the company's earnings before interest and tax at $154 million in 2005.

"Importantly the plan assumed that the vineyard development programme is limited to completing the development of existing land holdings and does not incorporate any estimates regarding the purchase and development of new land and the associated revenues."

However Mr Masfen says it is the present intention of Montana to continue to purchase and develop additional vineyard properties.

Comments from our readers

No comments yet