Wellington, Sept 5 - New Zealand's largest listed winemaker, Delegat's Group Ltd, is on track to double its profits within two years as it cashes in on a growing global appetite for New Zealand wines.
Managing Director Jim Delegat said the company viewed itself as a growth stock, and would benefit from expanding facilities and production of its premium varieties, especially New Zealand's world famous sauvignon blanc.
"We foresaw the strong demand for New Zealand wines and that's where we're ahead of our competitors: we can grow more quickly," Delegat told Reuters in an interview.
He said the company, valued at nearly US$190 million, was comfortable with market expectations for profit to double to NZ$30 million ($20.8 million) in the year to June 2009.
In the year to end-June 2007, net profit nearly trebled to NZ$14.9 million.
The company, founded by Delegat's immigrant Croatian father in 1947, is New Zealand's third-largest winemaker and has 12.7 percent of the country's NZ$700 million wine export market.
The company has invested in enough manufacturing facilities, sales and distribution networks and additional grape growing capacity to double production in 3-4 years, Delegat said.
Its NZ$45 million float of one-third of the company in 2006 was invested for growth, said Delegat, and its policy of retaining 70 percent of net profits meant it had sufficient means to fund growth. "The company is properly capitalised for its existing expansion plans," Delegat said, adding it would take advantage of either capital or debt markets if it needed more funds.
Delegat said he was confident export sales growth would see it meet its targets, but it was also looking for acquisitions within New Zealand.
"We wouldn't rule anything out if it was immediately accretive, be it vineyard acquisitions or competitor acquisitions," he said.
Delegat shares, 67 percent-owned by Delegat family interests, were flat at NZ$2.64 on Wednesday, but have gained 74 percent since listing in April 2006.
Delegat's main brand is the premium Oyster Bay. It exports 87 percent of its wine, primarily to Britain and Australia, but sales to the United States and Europe are growing fast.
New Zealand's winemaking reputation, based on high quality aromatic white wines, would bolster sales growth, Delegat said.
The industry has grown strongly in the last 10 years, led by a seven-fold increase in exports, which surpassed domestic consumption for the first time in 2005.
By 2010, the industry is expected to be worth NZ$1.5 billion a year, with NZ$1 billion coming from exports.
New Zealand's largest winemakers are foreign owned. France's Pernod Ricard has the market leading Montana and Corbans businesses, and the world's largest winemaker Constellation Brands owns the Nobilo brand.