NZ Wine Company profit down 37pc

Market DataS&P bear vs Moody's bull Can Wall St defy gravity? Record profit for Delegat’s Early gains for NZ shares Hellaby hit by BBQ sale Nuplex congratulated after 65pc profit slump Volatile start for NZ dollar Air NZ faces hefty profit cut Banks put heat on PGG Wrightson to pay debt Skellerup asks investors for cash as it targets debt The New Zealand Wine Company Ltd reported a 37 percent fall in profit in a year it regarded as a watershed for the wine industry.

The producer of Grove Mill and Sanctuary branded wines warned of the potential commoditisation of Marlborough sauvignon blanc through the sale of bulk wine.

It reported net profit after tax of $1.28 million in the year to June 30, down from $2.04m in the same period last year. Revenue rose 4 percent to $12.35m.

The global economic crisis and large vintage in 2008 placed enormous pressure on wine company's margins and cashflow in the 2009 financial year.

"The company took the tough decisions to sell its surplus 2008 bulk wine stocks at low or loss-making margins to enhance cashflow and reduce its wine stock to manageable levels," chairman Alton Jamieson said.

"The continuing industry wine surplus has resulted in severe price erosion in the marketplace which will continue to place pressure on margins into 2010," he said.

The company is paying a fully imputed final dividend of 2c per share on September 25. This is a decrease of 3c per share on last year.

The company said it recognised the importance of brands when protecting margins in the current environment.