Australian Vintage Limited (ASX: AVG)
Australian Vintage Limited (ASX: AVG), on 21 February 2025, delivered an improved cash performance despite challenging industry conditions in the first half of the 2025 financial year. The company achieved its best normalised cash outflow result in four years, with a reduction to negative $8 million, reflecting an $11 million improvement compared to the prior period. Net debt remained stable at $73 million, with strong free cash flow generation expected in the second half of the year, supporting the company’s goal of achieving cash flow neutrality for FY25.
The company’s revenue and market share remained steady, with strong performance in the UK and ANZ markets. Growth in white and sparkling wines helped offset declines in low-priced reds, while the company maintained its leadership in the no-and-low alcohol segment, particularly in the UK, where McGuigan Zero continued its strong growth. Product innovation played a key role in consumer engagement, with new launches such as CTZN, Lemsecco, and Tempus One Peach strengthening the brand portfolio.
AVG’s profitability was impacted by industry-wide pressures, with underlying earnings before interest and tax (EBITS) reaching $6 million, a decrease of $2 million from the previous year. However, disciplined cost control measures helped mitigate broader industry challenges. The company has been expanding in Asia, with partnerships with COFCO and Oceanus expected to drive double-digit growth in the region.
A key highlight of the company’s growth strategy is the upcoming launch of Poco Vino™, an innovative format-based wine product that has gained global attention. By adopting a "make where sold" model, sourcing wine from France and Italy for Europe, Napa for the USA, and Australia for Asia Pacific, Australian Vintage expects significant cost efficiencies and strong demand, with preorders for FY26 already exceeding $8 million. Major UK and Australian retailers have agreed to stock the product, making it one of the most significant launches in the company’s history.
Australian Vintage continues to focus on premiumisation and expansion in international markets while maintaining strong financial discipline. The company has set ambitious targets, aiming for free cash flow neutrality in FY25, growing to $20 million per annum by FY27, while achieving a return on capital employed (ROCE) of over 8% by the same year.
Leadership changes have strengthened the company’s ability to execute its strategy. With a strong alignment between the board and management, Australian Vintage remains well-positioned to capture emerging opportunities, drive innovation, and deliver sustainable long-term growth.
(Source: Company's Report)
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