Australian Vintage issues profit warning following Brexit vote

Australian Vintage has issued a profit warning in the wake of the Brexit vote ten days ago.

Neil McGuigan

Australian Vintage’s CEO Neil McGuigan issued the profit warning following the Brexit vote

The Australian company said sales at the end of May were up 8% year-on-year, on the back of strong sales of its key McGuigan (up 22% globally), Tempus Two and Nepenthe brands, which is it building in export markets. It had expected net profit before tax to be between 10% and 15% higher than last year’s $7.1 million.

However the company said it had been affected by the“significant unfavourable” movement in Sterling following the referendum on 23 June, with around $1 million (after tax) lost  on its UK-based working capital due to the effect of the exchange rate.

Chief executive officer Neil McGuigan said it was unfortunate the recent events surrounding the Brexit vote had adversely affected AVL’s profit.

“This event was outside of our control and is disappointing as our company was on track to achieve a 10% to 15% profit growth on last year. We expect the uncertainty in the UK to settle down in the short to medium term and are continuing to execute the growth plans for our branded business which we expect will drive an improved cash flow in the near future,” he said.

Penfolds winemaker Treasury Wine Estates yesterday confirmed it was unlikely to be “materially” affected by the Brexit vote, as its European region represented less than 10% of its total EBITS.

“The company maintains an active hedging strategy on the majority of its commercial wine exports to the UK,” it said.

Following the UK’s decision to leave the EU, Tony Battaglene
, acting chief executive of the Winemakers Federation of Australia issued a detailed briefing to Australian wine companies highlighting the implications of the changes, and confirmed it was monitoring the situation and would be working with Wine Australia and the Australian Government to support the continued growth of Australian wine exports to the UK and EU.

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