Pernod Ricard NZ falls deeper into red on $119m write-down, dwindling sales
French liquor giant Pernod Ricard's local unit widened its annual loss after writing down the value of assets and investments by some $119 million as falling sales and higher costs flattened its margins.
The New Zealand holding company, Millstream Equities, reported a loss of $182.4 million in the 12 months ended June 30, according to financial statements lodged with the Companies Office.
That is up from a loss of $105.3 million a year earlier when it booked a $99 million loss on the sale of local assets including the Lindaeur brand.
The liquor company wrote down assets by $19 million and booked a $100 million impairment charge on goodwill in the latest year.
Gross profit almost halved to $39.4 million on an 8.7 percent fall in sales to $235.9 million as costs were bolstered by under-utilised wineries and poor weather lowered production.
Last year Pernod Ricard closed its Hawke's Bay Winery in Napier and shifted those operations to the Church Road winery down the road. The move was part of a decision to exit "non-strategic" vineyards and led to a $6 million impairment charge on the company's biological assets.
The global parent injected $715.4 million of new capital during the year, almost doubling the shares on issue and keeping the company's equity positive at the balance date.
The company took a $24.1 million provision for legal claims in the period.
Pernod Ricard is one of several companies fighting the Inland Revenue Department over its use of mandatory convertible notes – a hybrid security with characteristics of debt and equity.
The tax department alleges the securities, which let companies juggle debt and equity to provide a tax advantage, were used simply as a means to minimise tax.
"The company and group will continue to dispute the proposed adjustments," the financial statements say.
Pernod Ricard also flagged a dispute over the sale of Lindaeur and associated assets in 2010.
The company says it received a High Court judgment in its favour after the June 30 balance date, which has since been appealed by Lion Nathan subsidiary, Lion Beer Spirits & Wine (NZ).
Pernod Ricard did not disclose what the dispute was over citing commercial sensitivity, but did not think it "probable that an outflow of resources will be required".