Australian Vintage wine sales 'beat expectations'

WINE company Australian Vintage (AVG) says sales in the 2008/09 financial year were better than expected.

AVG also said today it was on track to meet market expectations when it reports its annual results on August 26.

"In one of the Australian wine industry's toughest years, a focus on export and driving branded wine is delivering nine per cent higher sales,'' AVG chief executive Dane Hudson said in a statement.

"Our sales are significantly ahead of the industry in both volume and value.''

The company said that higher sales and the benefits of a strategic review had delivered strong cash flow, cut debt and enabled the company to secure new longer-term financing.

Mr Hudson said that following a strategic review earlier this year, AVG had a more flexible operating platform that had reduced costs.

"This combination of higher sales, reduced debt and lower costs generated a $29 million positive operating cash flow in the second half of the financial year compared to a negative operating cash flow of $1.1 million for the same time last year,'' he said.

Debt had been cut from $169 million at the end of December 2008 to $145 million at the end of the financial year.

Operating cash flow for 2008/09 was a positive $17 million.

"As a result we have reached an in-principle agreement with our bank to extend the debt facility for a further two years,'' Mr Hudson said.

AVG shares were five cents higher at 22 cents at 11.12am (AEST).