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(Sharecast News) - English wine producer Chapel Down saw a big drop in profits in 2024 due to falling revenues and a fair value adjustment on biological produce, but said it expects "strong" sales growth in 2025.
The Kent-based company, which had already released sales figures for the year back in January, reported adjusted EBITDA of 2.4m for the 12 months to 31 December, down 58% on the year before.
The decline was mainly due to a 2.7m hit from an accounting adjustment for 'viticultural profit'. The fair value movement is a non-cash adjustment, calculated as the estimated market value of grapes harvested, less the vintage's growing costs, the company explained.
Net sales revenues totalled 16.4m in 2024, down 5% on the year before, but fourth-quarter sales were up 7% year-on-year.
When excluding the now-exited spirits business, fourth-quarter revenues would have been 10% higher than last year, and this positive momentum is said to have carried into the new year.
Stocks grew 18% over the year to 26.6m as a result of an "exceptional" harvest in 2023, which are expected to underpin future sales growth.
However, increased stock levels and the additional planting of 122 acres of new vines has resulted in net debt surging to 9.2m by year-end, up from 1.2m at the end of 2023. Nevertheless, the company said it retains significant headroom on its 20m revolving credit facility.
Chapel Down also announced a new agreement with Jackson Family Wines for the distribution of sparkling wines into the US, effective from mid-Q2.
The US is the company's largest potential export market, but in announcing the deal on Thursday it didn't predict how newly imposed trade tariffs on US imports would affect sales.
In an outlook statement, Chapel Down said: "The consumer environment remains uncertain, but Chapel Down is currently trading well ahead of prior year and expects strong sales growth for the year, with a return to full profitability."
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