Southcorp’s year end results were announced recently, together with a business improvement program known as ‘Project Veraison’. The announcement of the company’s record loss of A$922.9 million included its EBITA (earnings before interest, tax and amortisation) of A$132.1 million, the improvement of net debt by almost A$100 million from the May 2003 forecast, the writing off of A$642.5 million as goodwill and the write-down of the Rosemount Estate brand name by A$240.0 million to A$340.0 million. According to chief executive John Ballard the write-down of the Rosemount Estate brand was done to meet accounting standards, a treatment that ‘in no way reflects my great belief in the power of the Rosemount Estate brand’. Other measures included a change in the company’s US depletions policy with an impact of A$22.9 million, restructuring and redundancy costs of A$20.8 million, the write-down of the Independence Wine Company (IWC) of A$20.5 million, adjustments to the value of employee share plans of $17.2 million and a ‘significantly reduced’ capital expenditure outlook. The UK & Europe delivered an EBITA loss of $8.0 million ($71.9 million profit in 2002), with volumes down 17% and sales revenue down 32%. The Americas region delivered EBITA of $100.0 million ($134.3 million in 2002), with volumes up 10% and sales revenue down 8%. The total dividend for the financial year ended 30 June 2003 is 10 cents per share, franked to 80%. John Ballard has moved swiftly in his short time at the company’s helm to restructure its top tiers of executive management and their reporting channels. Of course his new appointments will have to perform, but significantly, the company entered the 2004 financial year without a substantial inventory overhang. Although Southcorp continues to be subject to rumours of takeover in full or in part, it would appear that with the assumption that it can quickly return to a more profitable means of doing business at the sales level, its suite of key brands should pull through without excessive further bloodshed. In my opinion, it is in the interests of Australian wine at large that it remains intact and independent.
