Chapel Down, the UK’s largest winemaker, has encountered significant financial setbacks as it ceases sale discussions and revises its sales forecast downward.
The company’s decision to halt its sale comes after a comprehensive review of strategic funding options aimed at fuelling growth through new vineyards and a bespoke winery. This move led to a nearly 20% drop in its share price, marking a 40% decrease in the company’s value since the start of the year. The management stated that no potential transactions promised improved long-term shareholder value.
In addition to abandoning its sale plans, Chapel Down has adjusted its full-year forecast amidst expectations of declining year-on-year net sales and profits. The recent period has been notably challenging due to the UK’s second-worst harvest on record. The adverse weather conditions and pest issues have resulted in a non-cash charge estimated between £750,000 and £850,000. Consequently, these factors have pressured the company’s financial performance.
The company’s recent half-year report highlights a 22% plunge in profit, which has fallen to £3.41 million from £4.78 million in the corresponding period last year. Sales also saw a downturn of 11%. Despite these substantial challenges, the former CEO, Andrew Carter, expressed optimism regarding the operational advancements and sustained trading strength. However, he acknowledged that the off-trade challenges have significantly impacted the results.
Chapel Down’s recent struggles reflect the interplay of strategic decisions and external agricultural conditions. While abandoning the sale process may prioritise long-term stability, the impact of an unfavourable harvest season remains a significant obstacle for recovery.
