8 Sep 2011

Wine Company losses deepen

8:26 pm on 8 September 2011

Losses at the New Zealand Wine Company have widened.

The marketer of the Grove Mill, Sanctuary and Frog Haven brands, lost $3.2 million in the year to June, an increase of 68% compared with the previous year, mainly due to asset writedowns.

Revenue fell 15% to $11.1 million, due to a wine glut forcing down prices and a high New Zealand dollar against the US dollar and British pound, where most of its sales go.

Cashflow turned negative to the tune of $1.5 million, due to higher levels of stocks because it failed to meet sales targets.

The company is also in breach of its banking commitments and is still seeking a waiver from ANZ New Zealand, to whom it owes about $17 miillion.

The company's auditors say that uncertainty means there's significant doubt about its ability to continue as a going concern.

NZ Wine Company is considering raising equity from shareholders to repay bank debt. The options include a discounted share issue, a merger with a competitor, or seeking a cornerstone investor.

The company lost chief executive Rob White two months ago after eight years. His replacement intends cutting costs to restore the firm to profitability as soon as possible.

Company chairman Alton Jamieson told business editor Patrick O'Meara it's been a difficult year.