Marlborough Wine Estates Announces FY21 Results

Company Announcement

30 August 2021

MARLBOROUGH WINE ESTATES ANNOUNCES FY21 RESULTS for the year ended 30 June 2021 (FY21)

• Solid progress implementing the branded wine growth strategy in New Zealand and through expanded international market distribution
• 5% increase in revenue for the year driven by 41% growth in branded wine sales
• While a premium vintage, the lower 2021 harvest yield reduced the volume of grapes available for sale, impacting on results
• Increased investment into marketing, people, governance and IT systems to support growth
• Company is in a strong financial position, with low debt, a refreshed Board, new winemaker, and targeted growth opportunities.

Award winning New Zealand wine company, Marlborough Wine Estates Group Limited (NZX: MWE), has reported its unaudited preliminary results for the year ending 30 June 2021 (FY21), with increased revenue and branded wine sales.

There is continuing strong demand for New Zealand wines, in both domestic and international markets. Good progress has been made expanding MWE’s New Zealand distribution with new listings in Countdown and Foodstuffs supermarket chains, and expanded market share as consumers in lockdown turn to trusted brands on retail shelves.

Internationally, the company shipped its first significant orders to Canada, Malaysia and Singapore. Consistent orders also continue to be received from existing clients in China, Japan, Taiwan, and Australia despite the in-market and logistics challenges posed by COVID-19.

The company reported revenue of $6.7m, up 5% on the prior year. Branded wine sales increased from 28,000 to 38,000 cases (9le), delivering a 41% increase in branded wine sales revenue to $3.9m. The revenue result was impacted by the previously reported reduction in the volume of grapes harvested for Vintage 2021, which reduced the grape and bulk wine revenues by 22% to $2.9m. Gross margin was similarly impacted, primarily due to the lower vintage yield. The company’s grape supply are progressively freeing up and MWE intends to allocate its supply to support its strategy and growth plans.

A number of growth opportunities have been identified and investment has been made into marketing and people, as well as governance and IT to support MWE’s continued growth momentum.

Pleasingly, the long running dispute between the Ministry of Primary Industries (MPI) and MWE’s former contracted wine processor and the insurance company has been concluded, with MWE receiving settlement of $240,000 after deducting legal costs.

MWE reported a net loss after tax of $0.6m for the year, reflecting predominantly the impact of the lower 2021 harvest on grape sales and increased cost of sales, and some investment into growth.

The company undertook a small capital raise in February 2021, raising $1.24m (net of capital raising cost). The proceeds are being utilised to support MWE’s growth strategy and invest in higher inventory levels to meet expected future demand. Cash and cash equivalents were $1.7m at year end and working capital was $5.7m improved from last year $4.9m. The $5.3m bank loan was extended to September 2023.

Outlook

MWE has a strong financial structure with a low debt position and The Board is confident the company is well placed for further growth in the coming years. The focus of the new financial year is on continuing to develop the distribution network and branded wine sales by optimising the marketing investments to drive profitability and sustainable revenue growth.

CEO of Marlborough Wine Estate, Catherine Ma, said: “We are positioning the business to take advantage of opportunities to maintain strong growth momentum in branded wine sales in both New Zealand and internationally. We will be building on our existing distribution relationships and are pleased to recently announce the appointment of premium wine distributor, Hayward Bros, as the UK distributor for our OTU Estate brand.

Growth initiatives in FY22 are focused on:
• Further growth in sales of MWE’s premium wines
• Continuing expansion and growth into international markets
• Investment into digital marketing to grow MWE’s online presence and capture the direct-to-market consumer.
• MWE will look for opportunities to grow by acquisition, expanding its supply and distribution channels.

MWE continues to monitor the impact of the COVID-19 pandemic around the world, including the supply chain challenges. With Covid-restrictions expected to ease in many key markets, and continued strong export demand, MWE is confident it is positioned to capture new opportunities and grow its revenue and profitability.

ENDS

Authority for this announcement
Name of senior manager or director authorised to make this announcement: Catherine Ma
Contact phone number: 09 215 6650
Contact email address: [email protected]
Date of release: 30 August 2021

For media assistance and enquiries, please contact: Jackie Ellis on 027 246 2505 or email [email protected].

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Announcement PDF