Egg is surely all over the faces of the analysts who predicted a 12% decline in profits at Southcorp, which has experienced a difficult year at the hands of the share trading community. Instead, the company exceeded all forecasts with a 45% leap in net profit to A$312.7 million. Excluding the one-off benefit from the sale of its water heating business, it still made a profit of A$175.2 million. These profit increases can be attributed to increases in sales of premium wines, since the fly in the face of a decline in overall sales from A$3.6 billion a year ago to A$2.8 billion today. Another contributing factor must surely be the company’s new-found tendency to release its premium wines at a considerably younger age than in the past. Sales of packaged cases of bottled wine increased by 11.9%, while the group’s four key brands of Lindemans, Penfolds, Wynns and Rosemount increased sales by 25% to 13.9m cases. Penfolds, in particular, has increased sales by 55%, presenting a clear challenge to winemaking and management not to compromise quality as growth continues.
