The plunge in the British pound caused by the Brexit vote has punched a $1 million hole in the profits of Australian Vintage, which owns wine brands McGuigan, Nepenthe and Tempus Two. 
The ASX-listed wine company warned on Tuesday the sharp drop in the British pound would trigger an unforeseen unrealised foreign exchange loss of around $1 million on an after-tax basis because of the impact on the firm's working capital in Britain.
Australian Vintage chief executive Neil McGuigan labelled the tumble in the final week of the company's financial year as "disappointing" and an event that was outside of the company's control. He said the company's foreign exchange hedges were based on "caps and collars" and provided a range rather than a specified forward exchange rate, which had brought the company unstuck.
Mr McGuigan said it was an unfortunate turn of events because without the Brexit vote and the subsequent currency plunge, Australian Vintage had been on track for a 10 to 15 per cent rise in net profit after tax on the 2014-15 profit of $7.1 million.
Shares in Australian Vintage dropped more than 7 per cent on Tuesday afternoon when the trading update was announced to the ASX, pushing the stock down to 52Â¢. It had been trading at 65Â¢ on   June 6.
The McGuigan brand globally has generated an increase in sales of 22 per cent, the company said.
The blow for Australian Vintage comes a day after the world's largest stand-alone wine company, Treasury Wine Estates, said its 2016-17 financial results would not be materially impacted by the currency shifts in the wake of the Brexit vote.
Treasury owns the Penfolds, Wolf Blass and Wynns brands at the premium end of the market, but in   January it also became the owner of Blossom Hill, the No.1 selling white wine in the UK and the No.2 selling red wine.
Blossom Hill operates at the lower end of the commercial wine market and came with a number of other premium Californian brands in the $754 million acquisition of British drinks giant Diageo's United States wine business.