Australian Vintage's performance improve

Wine company Australian Vintage Ltd says its performance is continuing to improve and it still hopes to double its annual underlying profit despite the high value of the Australian dollar.

Australian Vintage said on Wednesday that industry conditions were still very challenging but that a restructuring of the company had helped generate greater exports of branded wine, strong cash flow, lower debt and higher profit.

"Regardless of the very strong Australian dollar, Australian Vintage continues to target doubling its after-tax profit for the full year," Australian Vintage chief executive Dane Hudson said.

Australian Vintage said at the release of its 2008/09 results in August that it was targeting 100 per cent growth in net profit before significant items.

The company said on Wednesday that talks were continuing with global wine giant Constellation Brands Inc (CBI) about combining part of CBI's Australian and UK operations with Australian Vintage in exchange for a non-controlling, 50 per cent equity interest in the combined entity.

If a transaction is finalised, control of the combined entity would be shared between CBI and Australian Vintage shareholders.

Mr Hudson said Australian Vintage's branded export sales were nine per cent higher in the 2009 calendar year compared to 2008.

"This is particularly impressive given that in the Australian industry overall export sales for the 12 months were down eight per cent," Mr Hudson said.

"Most pleasing for us was that the market share of Australian wine sold in the UK represented by our brand McGuigan doubled in the off-premise retailers."

Mr Hudson said growth was driven by the improved quality of the McGuigan brand.

The company had also benefited from its lower level of debt.

The company cut net debt at December 31, 2009 to below $140 million - more than $5 million below the level at June 30, 2009 and about $30 million below the balance at the end of December 2008.

Australian Vintage is expected to announce its half year results in late February.

Australian Vintage booked a net profit before significant items of $4.3 million for the year ended June 30, 2009, and a net loss after significant items of $123,640.

Shares in Australian Vintage closed steady at 32 cents on Wednesday.