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Chapel Down blames off-trade ‘challenges’ for profit drop as CEO exits
Kent-based English wine producer Chapel Down has highlighted how “one-off” factors in the off-trade have seen a big drop in profits for the firm.
According to its half-year results, the AIM-listed producer has seen its pre-tax profits reduce from £2.4m to just £40,000 in the six months to the end of June.
Describing a “difficult macroeconomic environment”, it also announced that its chief executive Andrew Carter will step down in the first half of 2025.
Its results saw EBITA fall by 58% to £1.3m from £3.2m in 2023 and net sales fall by 12%, mainly driven by a 36% drop in the off-trade, which it said was due to a lack of re-stocking and a difficult comparison base due to King Charles III coronation the previous year.
But the producer did say that exports, on-trade and ecommerce had all seen double-digit growth.
Profits were impacted by a reduction in sales of English Sparkling, a higher cost of goods sold, as well as a reduction in the value price of its products.
Sale price of its produce fell by 54% in 2024 to £773,000, net debt rose to £5.8m from 1.3m which was driven by the planting of the new Buckwell vineyard and costs associated with last year’s harvest.
In terms of its £12m credit facility, £5.1m remains undrawn and a new facility is expected to be signed in a new facility in the third quarter of 2024.
Despite the profit drop, Chapel Down said it was confident of its performance for the remainder of the year, due to strong consumer demand, and its planned promotional activities.
Outgoing chief executive Andrew Carter said that the producer “continues to be a market leader in the English wine industry, with the leading brand, the deepest distribution and internationally celebrated wines”.
He added: “2024 has seen continued strategic and operational progress with robust trading, particularly in the on-trade, export and direct-to-consumer channels which shows continued, strong consumer demand.
“In the first half, this has been offset by some challenges in the off-trade, predominantly caused by one-off factors.
“Chapel Down is fortunate to benefit from an exceptional team, committed to the delivery of our strategic plans and profitable growth, and I thank them for their contribution to Chapel Down’s continued success.”
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