Investments give De Bortoli a vintage year

DE BORTOLI Wines has more than doubled its profit, but the sharp uplift in earnings had little to do with its vineyard.

Richard Serong Darren De Bortoli is tipping a tough trading environment in the year ahead for winemakers.

DE BORTOLI Wines, one of Australia’s largest family-owned wine groups, has more than doubled its profit, but the sharp uplift in earnings had little to do with its vineyard and was rather the result of luck on the sharemarket and cost slashing.

The winemaker, a third-generation family-run company based in the Riverina region of NSW, saw its profit hit $11.399 million for the year ended June 30, a 126 per cent increase on the $5.04m profit last year. Revenue for the year was flat at $132.5m.

The company said in its annual report that the significant improvement in the full-year profit was due to an increase in the valuation of equities held by De Bor­toli and cost-reduction strategies across the business.

Managing director Darren De Bortoli told The Australian he had ridden a strong run by the local sharemarket over 2013-14, although equity prices had dipped since as the local market edged closer to a correction.

Mr De Bortoli is tipping a tough trading environment in the year ahead for winemakers due to the strength of the dollar, which made exporters less competitive, and a general pullback in consumer spending.

He added that he hoped the government would soon act to put an end to the “rorting” of the WET tax rebate by small uneconomic growers flooding the market with cheap loss-making wine. The misuse of the rebate was one of the biggest threats facing the Australian wine sector, he said.

Mr De Bortoli is somewhat of a maverick in the Australian winemaking community, preferring to sink millions of the family wine group’s cash into the stockmarket to help buttress earnings in the face of flatlining wine sales.

Sometimes this pays off, as in 2013-14, but two years ago De Bortoli slumped to a $24.7m full-year loss after the value of its equities investment portfolio sank nearly $50m. Poor investment decisions in the past have included a huge exposure to collapsed publicly listed mining giant Kagara and failed insurer HIH.

Last year, Mr De Bortoli did well from investment. De Bortoli’s annual report shows the winemaker is sitting on listed shares worth $27.49m as at June 30.