NZ Wine Co hit by oversupply, currency

NZPA

Friday 22nd July 2011

An oversupply of New Zealand wine and the high level of the dollar against the currencies of Britain and the United States hurt The New Zealand Wine Co's results in the last financial year.

The company today said its wine sales volumes in the year to June were 7 percent lower than a year earlier at 174,000 cases. Revenue was 14 percent lower at $11.3 million.

Factors hurting revenue and margins included the oversupply of New Zealand wine and a high level of bulk wine sales by the industry, the company said.

Adding to that was the level of the dollar, plus strong competition.

The underlying loss before revaluations and income tax for the full June 2011 year was expected to be up to $1.3m for the parent company.

Directors believed that underlying earnings would improve significantly during the 2012 financial year, while the company continued to work to establish a platform for financially sustainable growth.

An independent review being carried out by PricewaterhouseCoopers was working through the company's financial forecasts and business model which included its 66 percent interest in Californian import/distribution business Lineage Imports.

Lineage incurred start-up and operating costs that would result in a US dollar net earnings loss at June 30, 2011. NZ Wine Co's share of the Lineage loss was expected to be up to $300,000.

Revaluation gains and losses had not been finalised, but were expected to increase the total June 2011 full year net loss after tax that would be reported, NZ Wine Co said.

The result and annual report would be released to the stock exchange on September 1.

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