Foley Wines boosts profit 258% despite 5% sales fall in FY2026
Foley Wines reported a 258% surge in net profit for FY2026 despite a 5.4% decline in bottled sales revenue, driven by a premiumisation strategy and cost controls.
- Net profit after tax up 258.2% to NZD 2.937 million
- Bottled sales revenue down 5.4%, case sales down 9.5%
- Operating earnings before revaluations and tax up 323.5% to NZD 5.878 million
- Operating EBITDA up 22.8% to NZD 15.502 million
- Final dividend declared of 2 cents per share, fully imputed
Profit Surge Amidst Challenging Market Conditions
Foley Wines Limited (NZX:FWL) posted a remarkable turnaround in its financial performance for the year ended 30 June 2026, with net profit after tax soaring 258.2% to NZD 2.937 million, reversing a loss of NZD 1.857 million the previous year. This came despite bottled sales revenue falling 5.4% to NZD 62.8 million and bottled case sales declining 9.5% to 552,000 cases, reflecting the headwinds of a global oversupplied wine market and a bumper 2025 harvest that pressured prices.
The company's operating earnings, a key metric excluding accounting revaluations and tax, surged 323.5% to NZD 5.878 million, while operating EBITDA rose 22.8% to NZD 15.502 million, indicating strong underlying cash profitability even after absorbing higher marketing and promotional spend aimed at supporting premium brands.
Premiumisation Strategy and Market Focus Pay Dividends
CEO Mike Higgins highlighted that the company’s premiumisation strategy, focused on selling higher quality wines through established distribution channels, was pivotal in navigating a fiercely competitive market marked by deep discounting. “We worked closely with our distribution partners to protect margin and sell higher quality, more valuable wines,” Higgins said. The company has also been proactive in shipping the 2026 vintage early to maintain balanced inventory levels.
Geographically, Foley Wines saw mixed results: solid growth in China and the UK/Europe markets where it outpaced competitors, while the US market remained challenging due to tariffs. The Australian market experienced a notable 26% drop in case sales, attributed partly to a consumer shift toward locally produced products. New Zealand sales held up relatively well despite weak retail and hospitality sectors.
Operational Efficiency and Cost Management
Foley Wines managed to reduce interest and administrative costs significantly, contributing to improved profitability. The company also continued its vineyard replanting programme to align varietals with consumer demand, alongside capital investments including a new wastewater treatment plant at the Vavasour winery and frost protection infrastructure in Central Otago.
Operating cash flow declined to NZD 11.746 million from NZD 16.164 million the prior year, impacted by higher marketing expenditures and reduced income tax payments. Capital expenditure was NZD 3.907 million, consistent with prior years, underpinning ongoing operational improvements.
Sustainability and Brand Experience
The company reinforced its commitment to sustainability, transitioning nearly 75% of its packaged wines to super lightweight bottles and expanding solar energy use across multiple winery sites in partnership with Meridian’s Certified Renewable Energy programme. Brand homes in Martinborough and Central Otago continued to deliver premium wine and dining experiences, with The Runholder restaurant earning a prestigious Hat in the 2026 Cuisine Good Food Awards.
The Toast Martinborough festival, reimagined as a single-venue event with an enhanced entertainment lineup, including national icon Sir Dave Dobbyn, sold out within two weeks, underscoring the company’s strong engagement with consumers and the local community.
Dividend Declared and Outlook
Reflecting confidence in its financial position and operational progress, Foley Wines declared a final dividend of 2 cents per share, fully imputed, payable on 23 October 2026. The Board emphasised ongoing focus on debt reduction amid challenging economic conditions.
Looking ahead, the company expressed cautious optimism. “We are well positioned to sell through the 2026 vintage in a timely manner,” Higgins said. With expectations of a normal 2027 vintage and improving market conditions, Foley Wines aims to build on its premiumisation momentum and expand its international footprint.
Investors will be watching how Foley Wines balances inventory, manages costs, and navigates tariffs and shifting consumer preferences in key markets, particularly the US and Australia, to sustain its recent profit gains.
Bottom Line?
Foley Wines’ sharp profit rebound despite declining sales highlights the payoff from premiumisation and cost discipline, but sustaining growth amid market headwinds remains the key challenge.
Questions in the middle?
- How will Foley Wines navigate ongoing tariff challenges in the US market to regain volume growth?
- Can the company sustain margin improvements if competitive pressures intensify or grape prices fluctuate further?
- What impact will next year’s vintage quality and global supply dynamics have on Foley Wines’ premiumisation strategy?
