MELBOURNE - Australian wine maker McGuigan Simeon Wines' annual profit fell 11 per cent as a grape oversupply cut bulk wine margins.
McGuigan Simeon shares fell 23Ac to A$4.37 in Sydney. The company's shares have fallen around 19 per cent this calendar year compared to a 10 per cent gain
in the wider market.
McGuigan said net profit for the year to June 30 was A$35.9 million ($39.7 million) from A$40.2 million a year earlier.
Analyst forecasts after one-off items centred on A$37.4 million, according to Reuters Estimates, while the company in April warned it expected net profit of between A$35 million to A$40 million.
McGuigan is the largest listed Australian company solely focused on wine following the takeover this year of Southcorp by brewer and vintner Foster's Group.
The company's earnings have been hurt as the stronger Australian dollar makes it less competitive in export markets and by a glut of grapes that has driven down prices for wine McGuigan sells to other winemakers, which accounts for about one-third of the company's sales. Second-half net income declined 20 per cent to A$20.3 million.
"The overall market will continue to be very competitive with unfavourable exchange rates and oversupply," chairman David Clarke said. "The best we can foresee in the 2005-06 financial year is net profit before significant items in line with or marginally down on this year."
Chief executive Brian McGuigan yesterday said he agreed to sell a winery and bottling line in Griffith, New South Wales, as he moves more production and distribution to its new plant at Merbein in Victoria as part of a drive to cut costs and limit the impact of the glut and currency.
"This should yield a tightening of controls and improvements in costs of operations over the next two to three years," he said.
The company cut its second-half dividend to 13.25Ac from 13.75Ac a year earlier.
- REUTERS, BLOOMBERG
