Delegat's profit growth outpaces revenue on lower finance costs

Much of that gap traces to lower depreciation and finance costs as net debt fell to $307.0 million from $345.6 million and net debt to EBITDA improved to 4.7x from 5.6x, rather than to stronger trading.

Operating cash flow fell 17.5% to $62.3 million from $75.6 million even as EBITDA grew, cutting cash conversion to 95.0% of EBITDA from 122.6% in the prior half. Segment mix also shifted, with Europe's revenue share rising to 34.8% from 27.3% while the US share fell to 44.4% from 50.4%, against overall case-sales growth of 3%.

Bottom-line growth outpacing both revenue and EBITDA growth means the headline 85.1% PBT gain overstates underlying trading improvement. EBITDA growth of 6.4% is the cleaner read on operating performance, since much of the PBT and NPAT acceleration reflects lower interest and depreciation tied to a smaller debt balance rather than volume or pricing gains. This matters because investors relying on the NPAT growth figure alone would infer a stronger trading recovery than the top line supports.

Cash conversion fell to 95.0% of EBITDA from 122.6%, with operating cash flow down to $62.3 million from $75.6 million. Free cash flow before lease effects still rose to $51.8 million from $38.2 million because capex was cut 71.9% to $10.5 million, so cash generation was assisted by lower capital spending rather than by stronger operating cash collection, which is a less durable source of improvement.

The export mix shift, with Europe's share up to 34.8% and the US down to 44.4%, reduces reliance on a single largest market but occurs against essentially flat total revenue, so it reads as a rebalancing rather than a growth driver.

The prior full year's shape shows the first half historically contributed only around 25.4% of full-year NPAT, so a step-up into the second half would be typical, but without a stated target this release only confirms continued improvement, not whether it will meet any specific full-year expectation.

Cash conversion deteriorated versus a strong prior comparable, and while free cash flow improved, that improvement rests heavily on a 71.9% capex cut that may represent deferred rather than avoided investment. Working capital was broadly neutral, with receivable days improving to 61 from 70.5 offsetting inventory days rising to 145 from 140.3, netting to a modest $3.6 million reduction in working capital that is not itself a red flag but worth monitoring given the wine inventory cycle.

This briefing cannot assess forward demand trends, currency exposure sensitivity, or the specific drivers behind the fair-value adjustments referenced in the operating-to-reported profit reconciliation.