Daily ShareChat: Delegat's Group

By Jenny Ruth

Thursday 3rd September 2009

Winemaker Delegat's Group's record annual net profit of $30 million, up 57% on the previous year, was in line with its last guidance and with his estimate, says Goldman Sachs JB Were analyst Adrian Allbon.

"The feature of the result was strong operating cash flow generation of $42.6 million ($8.3 million in the previous year), driven by a significant release of inventory ($28 million) and improved debtor collection ($4.5 million," Allbon says.

This has lowered Delegat's net debt by $22.7 million to $139.1 million, better than his forecast of $156.8 million.

"The other positive feature of the result was Delegat's average case pricing, up 11% to $125, in a difficult consumer climate," he says. "This reflects a combination of in-market price increases, mix improvement and favourable currency movement."
Delegat's also reported its case volumes rose 20% to 1.738 million despite much-reported inventory and supply issues within the wine industry. The company says long-term consumer trends continue to favour its wine styles.

The company's guidance for the year ending June 2010 that it expects to achieve continued sales growth and a profit result at least in line with the result just reported is consistent with his $29.8 million net profit forecast, Allbon says.

BROKER CALL: Goldman Sachs JB Were rate Delegat's Group (NZX: DGL ) as buy.

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