Diamond Estates Wines & Spirits announced its second quarter results for the fiscal period ending 30 September 2014.
The Company generated a profit in Q2 2015 of $116,320, a substantial improvement from the Q2 2014 loss of $2,431,770. Sales for Q2 2015 were $5,863,300 compared to $5,255,155 for Q2 2014, representing an increase of 11.6%. Gross profit for Q2 2015 was up 28.2% over the prior year, to $3,065,401 from $2,391,051. Gross margin for Q2 2015 was 52.3%, an increase of almost 15% compared to 45.5% for Q2 2014. Operating expenses for Q2 2015 decreased by $476,718 compared to the same period in the prior year.
On a year to date (YTD) basis, the Company had a net loss in 2015 of $81,360 compared to $2,770,544 in 2014. YTD 2015 sales were $11,029,876 compared to $11,244,785 in YTD 2014, representing a minimal decline of 1.9%. YTD gross profit for 2015 increased to $5,651,598 in 2015 from $5,185,715 in YTD 2014, while gross margin for YTD 2015 was up 5.0% to 51.2% compared to 46.2% for YTD 2014. Operating expenses decreased by $436,729 in YTD 2015 over YTD 2014.
Sales for Q2 2015 were up $608,000 over Q2 2014 with the winery division accounting for the majority of the increase from export sales. Sales for YTD 2015 are very consistent with YTD 2014, showing a small decline of 1.9%, attributable to the timing of export sales. Overall winery sales in YTD 2015 are up $146,000 (1.9%) from YTD 2014. The timing of export sales is more evenly spread than in the prior year, which explains the apparent small year over year decline. This was offset by domestic sales increases, including direct sales from the winery, which were up significantly as a result of a contract to supply wine to VIA Rail and increased sales to bars and restaurants. Gross margin for the winery division for YTD 2015 was up 2.7% compared to YTD 2014 on the combined impact of price increases, product mix and higher throughput. Gross margin for the agency division for YTD 2015 was up 5.6% compared to YTD 2014 largely as a result of the strong sales performance in Ontario and Atlantic Canada.
"We are pleased that Diamond Estates was profitable in this quarter," stated J. Murray Souter, President & CEO of Diamond Estates. "Over the past 12 months, we committed to making this Company profitable and we are now achieving what we set out to do. Our continued focus on profitability and cost management has resulted in improved margins and positive cash flow from operations. Adjusted for seasonality, we anticipate the improvement to continue into future periods. The recent merger of our agency business with the Kirkwood Group to form Kirkwood Diamond Canada should result in improved operating margins and increased sales and distribution of our products and brands through the balance of the year and beyond. Additionally, many of the new brands that we have recently launched are beginning to gain traction in the marketplace and will contribute to the improving financial position of the Diamond Estates."
