Key Highlights

  • Statutory NPAT loss widened to $64 million, down $58 million on the prior year, driven by a $27 million inventory Impairment and restructuring costs.
  • Statutory Revenue increased slightly to $258 million, up $1 million, with second-half revenue growth of 2% offsetting a first-half decline of 1.7%.
  • Underlying free Cash Flow was positive $2 million, the first positive result since FY22 and a $35 million turnaround from FY23.
  • Net Debt increased to $89 million from $75 million, though this finished better than the company's $90 million guidance.

Australian Vintage Limited (ASX:AVG) reported its FY26 results with statutory revenue of $258 million, up $1 million on the prior year. While first-half statutory revenue declined 1.7% year-on-year, second-half revenue grew 2% as the company said the benefits of its innovation and acquisitions began to improve trading. Reported EBITDAS was a loss of $35 million, down $50 million on FY25's $15 million profit.

The company recorded a statutory NPAT loss of $64 million, $58 million lower than the prior year's $6 million loss. This reflected several one-off items, including a $27 million impairment of inventory, $6 million of restructuring costs, $4 million of Lease exits, a $3 million foreign exchange impact from a strengthening Australian dollar, and no asset sales occurring during the year, as well as a $5 million tax write-off. The company said it forecasts no further material inventory impairments going forward.

Cash Flow Turnaround a Key Feature of the Year

Despite the widened net loss, the company reported improvements in cash generation that it described as central to its turnaround strategy. Operating Cash Flow was positive $4 million, the first positive operating cash flow since FY22, a year that had benefited from COVID-related conditions. Underlying free cash flow generation, which excludes $16 million of one-off investments, was positive $2 million, marking the first positive underlying free cash flow since FY22 and representing a $35 million turnaround from FY23.

Second-half cash generation was $21 million, a $23 million improvement on the corresponding period in the prior year. The company said this result was achieved despite persistent Inflation and ongoing Supply chain pressures, including fuel levies, container availability and demurrage costs, which placed pressure on costs throughout FY26.

Inventory Reset and Balance Sheet Position

Inventory reduction was a strategic priority during FY26, with the company previously guiding that inventory levels would be significantly lower than FY25. In the first half, the exit of a vineyard lease reduced exposure to excess red grape varietals, while in the second half the company continued selling bulk inventory holdings for cash while maintaining sufficient stock for future sales growth and vintage requirements. As part of this reset, the company recognised the $27 million impairment to write down legacy inventory, with the inventory position now sitting at approximately 90 million litres, which the company said is significantly better than in previous years.

Net debt finished the year at $89 million, better than the company's $90 million guidance, though still an increase from $75 million in the prior year. The company secured renewed banking finance for the next two years, aligning with its three-year strategy, with financing facilities extended to $128 million through to March 2028, with an option to extend for an additional year to 2029, at interest rates in line with previous rates.

Brand Growth and FY27 Outlook

The company highlighted growth in its branded portfolio during FY26, led by McGuigan, which held flat in Australia while declining in the UK in line with the broader Australian wine category. The company's Poco Vino innovation sold more than 2.2 million units globally across six SKUs in 11 months, becoming what the company described as the fastest-growing glass format minis Brand in the UK in the latest quarter, with the brand projected to exceed $20 million in net sales for FY27. Lemsecco delivered growth momentum, with Australian scan sales up 116% year-on-year.

For FY27, the company expects to deliver a net positive cash position for the full financial year, reducing debt for the first time in years while accelerating the growth of Poco Vino and other acquisitions. The approximately $16 million of investments made during FY26, including in Poco Vino, Lemsecco, the MadFish Acquisition and the Invivo UK distribution agreement, generated an average IRR of 69% on a post-tax cash flow basis, which the company said supports its confidence in the growth strategy heading into FY27.

Conclusion

Australian Vintage's FY26 results present a company navigating a significant balance sheet reset, with a widened statutory net loss driven by inventory impairment and restructuring costs occurring alongside genuine improvements in underlying cash generation. The positive underlying free cash flow, the first since FY22, together with strengthened banking facilities and continued momentum behind Poco Vino and other brand investments, provide the foundation on which the company is targeting a net positive cash position and debt reduction in FY27.