WINE company Australian Vintage Ltd expects to lift its profits next year amid signs supply and demand in the industry are moving into balance.
Australian Vintage today said it had returned to profit, driven by higher sales of branded wine and ongoing benefits from cost reductions.
The company booked a full year net profit of $9.1 million for the 2009/10 financial year, compared to a loss of $123.6 million in the prior year.
The previous year had included the negative impact of $172.8 million in significant items, mostly asset impairments and provisions for onerous contracts.
"Australian Vintage is expecting to grow net profit after tax for the 2011 full year subject to no further material change in conditions,'' Australian Vintage chairman Ian Ferrier said today.
Chief executive Neil McGuigan said the company was "successfully facing up to a wine industry still undergoing serious structural change''.
"We did not sell as much bulk wine, and we have seen a switch from branded cask wine to private label cask wine,'' Mr McGuigan said.
"Our international sales relationships continued to strengthen and notwithstanding the very depressed conditions in the UK, we expect to further expand our sales volumes in this market and in the US.''
Mr McGuigan said industry wine stocks were slowly moving into balance, with a smaller 2010 vintage and some growers exiting the industry.
Mr Ferrier said wine markets would continue to be volatile, with excess stock from previous vintages still to wash through the market.
Economic conditions in the UK, in particular, and in the US could also affect future margins and sales.
"Given this volatility, the board have decided to take a conservative position on 2011 cash requirements and no final dividend for 2010 will be issued,'' Mr Ferrier said.
Shares in Australian Vintage were two cents lower at 27 cents at 2.14pm AEST today.
