|
The knack in the wine business is to see the glass as half full, not half
empty.
If BRL Hardy's Stephen Millar had his way, the market would focus on his
company's long-term potential rather than the wine maker's short-term hole in
cash flow.
Millar was adamant again yesterday, this time at a lunch for the press, that
BRL had the situation under control and a 25 per cent jump in inventories to
nearly $700 million won't force the company into any margin-diminishing
discounting. Rather the thing to watch is the Pacific Wine Partners joint
venture in the US with Constellation Brands.
That's just as well, given it appears PWP must now shoulder the
responsibility for driving earnings growth at BRL Hardy. Europe still has a
reasonable profile, but not enough on its own to keep profits rising at least 15
per cent a year.
PWP's chief executive, Jose Fernandez, said yesterday that in five years it
was possible that the value of BRL's stake in the business could exceed the
company's present market capitalisation. PWP has a rough target to create an
enterprise in that period worth $US2 billion ($3.6 billion), based around the
quick-selling Blackstone range which has the potential to become a 2 million
case brand. Do the maths and you come up with $US1 billion as BRL's share of the
spoils.
At home BRL Hardy is targeting a 2003 vintage at the lower end of a 260,000
to 290,000 tonne range. In that event, it will not have quite the problem with
inventories it has now.
Another thing worth watching is BRL's new UK brand, Hardy's VR. Retailing at
#4.99 ($14), or #3.99 on promotion, the brand is slated to go from zero to 1
million case sales in its first year.
BRL shares were up 15c to $8.58.
Cochlear catch-up
Six weeks can seem a long time in politics, business or sport. But, it isn't
quite long enough when it comes to bionic ear maker Cochlear.
The company's shares dropped 3.7 per cent to $35.77 after rival Advanced
Bionics won approval to resume sales in the US and Canada. It was only in late
July that Advanced withdrew its device when the US Food & Drug Administration
warned the implants might make the recipients susceptible to meningitis.
Cochlear was expected to have the entire North American market to itself for
perhaps six months while Advanced regrouped. It was expected that Advanced would
have found itself with a greatly reduced market share on its return.
Advanced, the sneaky little thing, has probably minimised the damage now that
it's back in business so soon. Whereas it might have lost perhaps 30 per cent
of the market to Cochlear had it spent six months of the sidelines, it may now
cede only 5 to 10 per cent.
As a result, all the analysts who upgraded their earnings forecasts for
Cochlear to reflect a tightened grip on the market have to take an eraser to
their estimates and come up with more conservative numbers.
Rebel with a cause
More than 12 months after Harvey Norman bought its controlling stake in Rebel
Sport analysts have given the sporting goods retailer the thumbs up. Since then
net profit has turned around, sales have surged, and the share price more than
doubled.
On Monday Rebel Sport reported $8.1 million in net profit for the 15 months
to June 30, 2002. It was a $7.89 million increase on the $208,000 achieved for
the 12 months to March 31, 2001. (Rebel Sport has changed its reporting date
from March 31 to June 30 to bring it into line with Harvey Norman.)
Catching analysts' eyes was the 36 per cent increase in sales revenue to
$296.8 million and a 5 per cent rise in like-for-like sales for the 12 months to
March 31. In the three months to June 30 sales rose a further 9 per cent.
A good snow season has contributed to a 16 per cent rise in sales for the
financial year to date. Sales on a like-for-like basis are up 12 per cent.
Analysts like the way Rebel is motivating employees. Individual stores are
responsible for their own finances and rewarded for good performances.
``Staff are more incentivised and you get a better result," said an
analyst.
Another said the decision to offload one Glue youth lifestyle chain store
during the period took pressure off earnings. ``They are going to run remaining
[three] Glue stores as hard as they can," the analyst said.
Tower heads down
If NZ-based life insurer Tower is looking for a takeover bidder, it seems to
be going the right way about it by helping to drive its share price into the
ground.
Tower is a company that investors say should be gulped up, yet never seems to
be able to strike a deal. Whether it can find a bidder is another thing.
The fall in the share price, down more than $1 since March to yesterday's
close of $3.13, finally attracted the attention of the NZ Stock Exchange
yesterday.
Tower blamed the fall, which gathered steam this week, on low volumes, a
small shareholder plan which is seeing stock sold into the market, and ``market
sentiment" bearing down on all the life insurers.
It's been an eventful few months with the retirement of long-serving managing
director James Boonzaier in July and restructuring which, among other changes,
is likely to see the company divest its corporate trustee business, but retain
its personal superannuation, wrap services and portfolio management operations.
But its size means it is more prey than predator as small wealth management
groups are gulped up by big banks.
|
Print Entire Page
