Wine business viewed as relatively stable even in times of crisis
At today’s annual results press conference in Hamburg, the wine trading group Hawesko Holding AG (HAW DE, HAWG.DE, DE0006042708) presented its financial statements for 2008 with complete annual accounts as well as its three-month interim report for 2009 for the period from January to March. In the first three months of the current fiscal year, Group sales declined by 9.5% to € 73.0 million (same quarter in the previous year: € 80.7 million). As already disclosed, the figure for the comparable quarter of the previous year includes additional sales of € 2.8 million from the delivery of the 2005 Bordeaux vintage, which was in strong demand. Sales of ultra-premium wines from Bordeaux and other wine-growing areas posted a noticeable decline in the quarter under review. However, the specialist retail (Jacques’ Wein-Depot) and mail order segments – the latter adjusted for the effect of the delivery of the 2005 Bordeaux vintage in the same quarter of the previous year – achieved a course of business which was stable to slightly above that of the previous year. Both of these segments focus on sales to end consumers. Business in the wholesale segment was characterised by the worldwide weakness of the secondary market for older-vintage Bordeaux wines, which is the primary focus of the French subsidiary company Château Classic – Le Monde des Grands Bordeaux, as well as by restraint in the catering trades. The result from operations (EBIT) amounted to € 3.1 million (previous year: €4.6 million), while the consolidated result after taxes and minority interests amounted to € 1.9 million (previous year: € 2.7 million). Earnings per share amounted to € 0.21, down from € 0.31 in the comparable quarter of the previous year.
The Hawesko management board notes that the figures for the first quarter of 2009 are within the expected range of its financial planning, considering that the outstanding performance in the previous year’s quarter is a very high basis for comparison. In view of the extremely difficult economic situation the management board expects a decline in sales in 2009 in the mid-single-digit percentage range (Group sales 2008: € 339 million). It makes no forecast for the 2009 result, but a clearly positive result as well as free cash flow significantly in the positive range for the year overall are expected.
Chief executive officer Alexander Margaritoff stated, ‘No matter which indicators or indices, barometers or statistics you use, the economic situation is desolate. Despite this, our development in the current fiscal year is not as negative as could have been expected. In times of crisis, people may give up their glass of champagne or ultra-premium wine, but not wine as such. We do not expect to beat the successful 2008 fiscal year – the best in our company’s history – but from today’s standpoint we have a good chance that 2009 could be the second-best year in the history of the company. As the strongest company in the wine sector, highly profitable and debt-free, we are in an excellent position in the market. We can rely on the best exclusive rights available in the wine business, we have an experienced executive management staff and a clearly defined and proven strategy which has been based for the past 45 years on Hanseatic virtues such as long-term relationships, solidity and transparency, and on customers who place their trust in the quality of our wines, our service and us as a company.’
The annual report presented for 2008 confirms the previously announced figures for the reporting period: net Group sales (excluding VAT) increased by 1.5% to € 338.8 million. Sales in Germany rose by 4.3% compared to the previous year, while a rise of only 2% was posted for the German wine market overall in 2008. Hawesko thus once again gained market share. At € 25.5 million, the operating result (EBIT) rose by 40% compared to the previous year (€ 18.3 million). The non-recurrence of a special tax expenditure in the previous year meant that the Group result after deductions for taxes and external interests more than doubled to € 14.6 million (previous year: € 6.7 million). Likewise, earnings per share rose to € 1.67 (previous year: € 0.76). At 23%, the return on capital employed (ROCE) for 2008 clearly exceeded the hurdle rate defined by the management board of 16% (previous year: 16%), while the free cash flow amounted to € 17.5 million (previous year: € 13.6 million). An increase in the dividend to € 1.20 (previous year: € 1.00) is being proposed to the annual shareholders’ meeting on 15 June 2009.
Final accounts for 2008 confirm preliminary figures
The wine trading group Hawesko Holding AG (HAW GR, HAWG.DE, DE0006042708) will declare a dividend for fiscal year 2008 of € 1.20 per share, thus exceeding the previous year’s dividend of € 1.00. At its meeting yesterday, the supervisory board of the company approved the corresponding dividend proposal of the management board on which the annual general meeting will vote on 15 June 2009. The proposed increase in the dividend corresponds to a rise of 20 %: A total of € 10.6 million will be paid out to the shareholders (previous year: € 8.7 million).
Beyond this, the supervisory board reviewed, discussed and ratified the annual and consolidated financial statements for fiscal 2008; the annual financial statements were thus approved. As previously announced, Group sales in 2008 (1 January to 31 December) were up by 1.5 % to € 338.8 million (previous year: € 333.7 million). In the final group accounts the operating result (EBIT) is even higher than originally reported based on preliminary figures, rising to € 25.5 million (previous year: € 18.3 million). Consolidated earnings after deductions for taxes and minority interests amount to € 14.6 million (previous year: € 6.7 million). This corresponds to earnings per share of € 1.67 (previous year: € 0.76). The Group balance sheet total amounts to € 170.1 million (previous year: € 176.6 million). Free cash flow (cash flow from ongoing business activities minus investments and interest paid out) registers an increase in 2008 to € 17.5 million (previous year: € 13.6 million).
The results of fiscal year 2008 as well as the course of business in the first three months of the current 2009 fiscal year will be presented in detail at the annual balance sheet press conference of Hawesko Holding AG on 29 April 2009.
Outlook positive despite the recession
The wine trading group Hawesko Holding AG (HAW, HAWG.DE, DE0006042708) published its preliminary results for the fiscal year just completed (1 January – 31 December 2008) today. The Group increased its net sales in 2008 from € 333.7 million to € 338.8 million, corresponding to a rise of 1.5%. Sales in Germany rose by 4.3% compared to the previous year; in contrast, foreign sales of premium older-vintage Bordeaux wines declined after a strong upward trend in 2007. In 2008 the German wine market overall grew in terms of value by only 2.2%, according to the German Wine Institute. Thus, Hawesko has once again increased its share of the market. According to preliminary calculations, the consolidated result of operations (EBIT) amounts to approximately € 25 million (previous year: € 18.3 million) which is well within the expected range. The financial result will amount to a net expenditure of € 3.2 million (previous year: € -2.6 million) as planned. According to preliminary calculations, the rate of tax expenditures will be 34%, so that consolidated earnings after deductions for taxes and minority interests is currently anticipated to be approximately € 14 million or € 1.60 per share (previous year: € 6.7 million or € 0.76 per share). Free cash flow is expected to exceed the previous estimate of € 14 million by € 2 million to € 3 million. Against the background of these preliminary figures, the Hawesko management board sees the economic basis to propose a dividend payout at least in the same amount as the previous year (€ 1.00 per share) to the supervisory board. The consolidated accounts of the Hawesko Group will be audited in March 2009 and presented to the supervisory board for review.
For the fourth quarter of the recently concluded fiscal year (1 October to 31 December 2008), the Group achieved sales of € 111.3 million, a decrease of 4.6% compared to the corresponding quarter in the previous year (€ 116.7 million). Sales achieved in Germany in the fourth quarter were at the same level as in the previous year; outside of Germany, on the other hand, the demand for older Bordeaux vintages declined significantly. The Group’s EBIT amounted to about € 13 million in the final quarter of 2008, compared to € 13.2 million in the same quarter of the previous year. The stationary specialist retail segment (Jacques’ Wein-Depot) increased its sales in the fourth quarter by 4.4% to € 37.3 million; on a like-for-like basis sales grew by 3.6%. At the end of fiscal year 2008, there were 271 stores (end of the previous year: 269). During the course of the year, five new stores were opened. As part of the ongoing adaptation of the network to the customer base, three depots were closed and three moved to new locations. In the fourth quarter, the mail order segment achieved sales at the level of the comparable period in the previous year, € 32.9 million (previous year: € 33.2 million). Despite the increasing threat of recession, the business volume of the successful 2007 holiday quarter was achieved once again. In the wholesale segment, fourth-quarter sales amounted to € 41.1 million, corresponding to a decline of 13.8% compared to the previous year. This was due primarily to the worldwide weakness in the secondary market for older-vintage Bordeaux wines, which is the focus of the French subsidiary Château Classic Le Monde des Grands Bordeaux, especially in the Asian markets.
Alexander Margaritoff, chief executive officer of Hawesko, stated: ‘After we had dealt with extensive non-recurring charges and considerable investments in new customer acquisition in 2007, we accomplished a major step forward in 2008. Our business has continued to grow; we have increased the result from operations by more than 35%, at least doubled the net result and achieved the highest level of profit in the company’s history. The continuous improvements made in recent years are bearing abundant fruit, for we are now operating even more efficiently than before. The pundits are expecting a severe recession in fiscal year 2009. Things will become more difficult for Hawesko as well, especially in the first six months with the previous year as a challenging basis for comparison. Despite this, we believe that many consumers consider the enjoyment of wine an indispensable pleasure even in difficult economic times, so that wine consumption will remain relatively stable during the year overall. Of course, the current economic developments will not bypass us entirely, but we won’t experience a disastrous slump. After all, we’ve already met challenging economic conditions in the past as well.’
Hawesko Holding AG is a leading supplier of premium wines and champagnes. In fiscal year 2008 the Group achieved sales of € 339 million through its three sales channels – specialist wine retail (Jacques’ Wein-Depot), wholesale (Wein Wolf and CWD Champagner- und Wein-Distributionsgesellschaft) and mail order (in particular Hanseatisches Wein- und Sekt-Kontor), and employed 610 people.