Owner of McGuigan and Nepenthe wines, Australian Vintage, recorded a one per cent drop in sales revenue to $257, and while it saw cash flow improvement in FY25, it remained behind company targets.
Snapshot
- Revenue: $257m, down 1%;
- EBITDAS: $15m, up 129%;
- EBITS: $1m, up 101%; and
- NPAT: -($6m), up 93%.
Earnings were impacted by a one-off first-time implementation cost of $6 million for Extended Producer Responsibility (EPR) legislation in the UK, which will be recovered through price increases from hereon in.
Its revenue and profitability were also impacted by market declines in commercial reds - offset by higher margin whites, innovation and reduced cost base.
A restructure and renewed operational strategy that began in August 2024 is expected to deliver a free cash flow neutral position by the end of FY26, +$10 million in FY27, and +$20 million by the end of FY28.
Topline growth will be delivered through further operational efficiencies, reducing fixed grape supply, selling excess bulk wine, building on export capability into China, Asia, and the Americas, and investing in innovation.
AVG said FY26 will be a “transformational year”, with the group targeting topline growth of 5-8 per cent, “reversing years of declining sales into growth and pivoting the grout on a positive free cash flow trajectory”.
Already ahead of budget in July, with positive uptake of new brands - Poco Vino and Lemsecco – being well received in the UK, their sales growth budgets have been increased to $15 million and $6 million. Early sales in the UK have exceeded estimates four times.
The group has plans to launch additional SKUs in sparkling wine, and premium ranges for global travel retail, hotel and on-premise.
“All of this growth will be serviced by three dedicated manufacturing hubs in Amsterdam for Europe and the UK, Napa Valley for the US, and Merbein for Australia, leveraging the planned “make where sold model” to limit shipping lead times, increase profitability and speed to market,” AVG said in a statement.
