Foley Wines Limited Analysis

Overview

Founded as Grove Mill Wine Company Limited, the company was established in 1988 when a group of Marlborough grape growers and business people recognised the potential of Marlborough as a premier wine-growing region. The early vintages achieved many wine awards to national and international acclaim. The Company changed its name from Grove Mill Wine Company Limited to The New Zealand Wine Company Limited in June 2002, it was listed on NZX since November 2003 under the symbol of NWC.

Foley Family Wines Limited, who operates wineries located in California and Washington State, completed a merger deal with NWC in September 2012. The company's name changed from The New Zealand Wine Company to Foley Family Wines Limited, and the ticker code was changed to FFW. In 2014 FFW purchased Martinborough Vineyard Estates.

On 3rd December 2018, Foley Family Wines Limited migrated the NZX Main Board and changed their name to Foley Wines Limited and their ticker code to FWL.

Performance

The following information was extracted from Foley Wines Limited's Full Year results, released on 29 August 2024:

BUILDING STRONG ROUTES TO MARKET PAYS OFF FOR FOLEY WINES IN TOUGH YEAR FOR INDUSTRY

THURSDAY, AUGUST 29 2024 – Foley Wines reports a better second half in the Company’s Annual Report to June 2024, published to the New Zealand Stock Exchange today.

OVERVIEW

Bottled Sales Revenue $62,491,000 (+ 0.3%)

Case Sales 561,000 (- 4%)

USA Case Shipments 133,000 (+ 60%)

Operating Earnings $4,129,000 (- 60%)

(Loss) After Tax $(4,081,000) (- 164%)

Profit after tax excluding one-off tax adjustment $467,000 (- 93%)

Operating EBITDA $16,176,000 (- 20%)

Foley Wines CEO Mark Turnbull said, “2024 was a tough year for the Company. Notwithstanding the headwinds faced, we were pleased that case sales were down only 4% on last year, which was a solid turnaround from the first six months.”

“Export case sales were down 5.8% which, when compared to the industry being down 21% for packaged wine, demonstrated the Company’s hard work on developing strong routes to market for our brands.”

“It became very evident that there was a significant over supply of Marlborough Sauvignon Blanc resulting in deep discounting. The strategy we adopted was to remain focused on selling packaged wine through the channels established and assisting the retailers with additional promotional funding to keep the brands in the forefront of consumers’ minds,” said Turnbull.

The Company reports a 60% increase in shipments to the USA during the year, despite total industry exports to the market being down 22%. “The Company invested heavily in the USA with various initiatives. This investment was a major factor in the increase in selling, marketing and promotion expenses of approximately $3m. However, this has meant the Company is already shipping the 2024 vintage to many markets and inventory is generally in balance,” said Turnbull.