DGL

[winner69]

Good communications by their people. …… headline is an ‘update’ but in reality a downgrade …..if it had been a guidance ‘upgrade’ they would have headlined that

But as filthy says it’s only minor at 10%

[Sideshow Bob]

https://www.nzx.com/announcements/426749

Got to get to page 16 before see Reported NPAT was $33.4m, down 18%.

[Ricky-bobby]

This harvest is looking very lite also which will have a big impact on next FY…

[kiwikeith]

https://www.nzx.com/announcements/426749

Got to get to page 16 before see Reported NPAT was $33.4m, down 18%.

I thought the same thing. Normally a bad sign when the NPAT is not close to the top of the release,

[Sideshow Bob]

No surprises but harvest down significantly. Quality excellent though....

https://www.nzx.com/announcements/430413

Delegat Group Limited announces that it has concluded the 2024 harvest which has delivered excellent quality grapes in all regions. The Group’s 2024 harvest is 34,150 tonnes, down 24.7% on the 2023 harvest of 45,340 tonnes.
Marlborough, Hawke’s Bay and Barossa Valley experienced cooler spring growing conditions resulting in a significant, region-wide reduction in yield for the 2023/24 growing season. The Group’s harvest is in-line with regional industry results. The vintage outcome has delivered excellent quality wines for the Group’s brands.
The Company will provide updated guidance on future case sales volumes for 2025 and 2026 at the Annual result announcement.

[Jaa]

Still dropping on the lower harvest and what looks like flat revenue and profits? Plan seems to be to sell less cases at a higher price? Sounds a bit optimistic to me.

What could turn Delegat around? Lower NZD?

[Ferg]

Still dropping on the lower harvest and what looks like flat revenue and profits? Plan seems to be to sell less cases at a higher price? Sounds a bit optimistic to me.

What could turn Delegat around? Lower NZD?

No buyers right now so this will drift for a while.

There has been a lower NZD since the last annual report but the impact will be somewhat muted by the forward cover already in place. I expect favourable USD and GBP FX movements could add around $2m to NPAT in this fiscal year. Not enough to turn anything around.

Forecast case sales for FY24 were initially expected to increase, although the last release changed this to a slight reduction. It sounds like the downward revision is not due to a lack of consumer demand, instead it sounds like de-stocking from previously high trade inventory levels. FY23 had 3.67m case sales and the last forecast for FY24 I saw had 3.61m cases. In light of the low harvest I wonder if stock is being held back....?

Per the announcement it appears the low harvest is a local industry wide issue (and a bit of a shocker!). I estimate the lower harvest will result in about 8-900,000 fewer cases available for sale in future periods. This is assuming they don't procure grapes from other growers, but given they were also impacted that might not be financially practical. I see Australian growers have been suffering as a result of the Chinese import restrictions but I'm not sure if Delegat's can use that to their advantage....I hope they were looking into that. I can't find any info on Delegat's buying grapes to supplement their harvest....I expect they would which would boost cases available for sale. Although given there are FV adjustments to biological assets versus purchased grapes in the AR suggests Delegat's buy grapes from other growers (I need to research this more).

I also expect the lower harvest this year will increase the per litre cost of production as various costs are divided into a smaller bottled volume. So the immediate outlook is not good for both sales and margin. I suspect this impact will be felt across 2 years as opposed to 1 year given the time taken to make and sell wine.

In conclusion there will likely be a blip to earnings in FY25 and/or FY26 unless they can supplement their harvest with equivalent grape purchases. I also think the market has over-reacted to this news in light of recent investments that seek to grow volumes. The Board and Management now need to earn their pay.