Andrew Peller Limited says its profit nearly doubled in the second quarter of its fiscal year, as lower costs for bottles and freight and a provincial grape support program offset a modest dip in sales.
The Grimsby, Ontario-based wine producer reported net earnings of $8.9 million, or 21 cents per Class A share, for the three months ended Sept. 30, 2025, compared with $4.6 million, or 11 cents per share, in the same quarter a year earlier, the company said in a news release. Net earnings for the first six months of the fiscal year were $13.5 million, up from $4.2 million.
Revenue for the quarter fell 3.4 per cent year over year, and was down 1.9 per cent on a year-to-date basis. The company said the decline was expected, because sales in the comparable quarter of the prior fiscal year had been lifted by the LCBO strike in July 2024.
It was a strong second quarter, highlighted by significant year-over-year growth in our margins, earnings and cash flow, and further strengthening of our balance sheet.
Paul Dubkowski, the company's chief executive officer, said that in the news release. He noted that excluding the impact of the strike, second-quarter sales rose over the prior year, led by results from liquor boards, grocery, big-box stores and the company's estate properties.
"Looking ahead, we are well positioned to continue growing market share in our core wine businesses while also building on our success to date in high-growth product segments and new sales channels in the Ontario market," Dubkowski said.
Gross margin climbed to 45.7 per cent of revenue in the quarter, up from 42.4 per cent a year earlier. For the six-month period, gross margin improved to 44.1 per cent from 40.5 per cent. The company credited its ongoing cost savings programs — which lowered spending on glass bottles and inbound freight — as well as the Ontario Grape Support Program, which contributed $2.4 million in the quarter and $4.5 million over six months. That program was not in place during the comparable periods of the prior fiscal year.
Selling and administrative expenses fell to 25.6 per cent of revenue in the quarter, from 26.0 per cent a year earlier, driven mainly by lower compensation costs tied to restructuring. Interest expense dropped 28.4 per cent in the quarter and 21.4 per cent year to date, reflecting lower average debt and reduced interest rates.
Earnings before interest, amortization, net unrealized gains and losses on derivative financial instruments, other expenses, and income taxes — a non-IFRS measure the company calls EBITA — rose 18.4 per cent to $21.3 million in the quarter, from $18.0 million. Over six months, EBITA increased 21.3 per cent to $37.4 million from $30.8 million.
The company also recorded a net unrealized non-cash gain of $0.6 million in the first six months of the fiscal year related to mark-to-market adjustments on interest rate swaps and foreign exchange contracts, compared with a loss of $1.7 million in the prior year period.
As part of a strategy to recognize value from non-core assets, Andrew Peller sold land, vineyard and building assets in Kaleden, British Columbia, during the quarter. The assets had a net book value of $1.0 million and sold for net proceeds of $1.2 million.
Andrew Peller Limited is one of Canada's leading producers and marketers of wines and craft beverage alcohol products, with brands including Peller Estates, Trius, Wayne Gretzky and Sandhill. The company owns and operates 101 independent retail locations in Ontario under The Wine Shop, Wine Country Vintners and Wine Country Merchants store names. Its shares trade on the Toronto Stock Exchange under the symbols ADW.A and ADW.B.
