Jim and Rosemari Delegat sat front and centre at Delegat’s annual meeting on Tuesday as the company celebrated its 75th anniversary and told shareholders the winemaker’s cup was looking full despite ongoing pandemic struggles.
New chair Graeme Lord told shareholders the June 2022 year was another “strong year” for the group, with the 11% decline in reported earnings a symptom of inflation and a smaller harvest.
“The decline relative to the prior year was due to the higher cost of goods associated with the impact of the lower yielding 2021 vintage as well as significant inflationary cost increases both locally and globally,” Lord said.
Chief executive Steven Carden, who started in January, told shareholders the ongoing pandemic continued to have a “tangible impact” on market conditions.
“Social distancing requirements and ongoing lockdowns in some of our major markets continued to reduce sales in the on-premises channel, although we saw a strong recovery in this channel throughout the second half of the year,” he said.
Brexit
Carden said the group’s achievement of 3,360,000 cases in global case sales – 6% more than in 2021 – would’ve been higher if the company hadn’t struggled with ongoing global port congestion and constrained shipping line capacity.
The company’s North American market remained a key focus for growth due to it accounting for 1,608,000 case sales, almost half of Delegat’s overall case sales in the 2022 financial period.
The UK market intake edged lower slightly by 1% to 1,060,000 cases, while Australia, NZ and the Asia Pacific region achieved sales of 692,000 cases – 12% higher than in the previous year.
A shareholder asked whether the lower UK sales was because of Brexit and how the UK's withdrawal from Europe affected that market.
Lord said Brexit wasn't the main issue, rather it was the weak British pound, and that the UK business was tracking “very well”.
“The exchange rate is less favourable for us as an exporter from New Zealand to the UK, which therefore makes sales less profitable into the UK at a given price,” he said.
But, he added, the UK was still a very strong part of the business.
Carden said Delegat was on track to grow sales by 9% to 3,672,000 cases in the 2023 June year, with operating in a range of $60m-to-$64m.
Carden said the Delegat board was confident in the group’s ability to “prosper and drive” sustainable sales and earnings growth over the long term.
“The group has revised its sales growth projections to 3,826,000 cases in FY24 and 3,947,000 cases in FY25,” he said.
Delegat shares were unchanged at $10 per share in late afternoon trading.
