SYDNEY: Australian vintner Treasury Wine Estates Ltd reported lower-than-expected revenue, citing US supply chain difficulties and adverse consumer trends in China.
Treasury Wine, maker of the iconic Penfolds brand, reported a A$649mil first half net loss yesterday, compared with a A$221mil profit a year earlier.
Net sales revenue came in at A$1.3bil, down 16% year-on-year and lower than analyst expectations of A$1.38bil.
However, the company said it expects second-half earnings to be higher than the first half, based on its key earnings before interest and taxes performance metric, a measure to smooth the volatility of agricultural valuations.
Treasury Wine announced yesterday that it had temporarily suspended its interim dividend to prioritise the preservation of capital and reduce leverage. The resumption of the dividend will depend on financial performance, the company said.
Chief executive officer (CEO) Sam Fischer, who started in the role in October, said in a statement that despite yesterday’s results, he was encouraged that the wine company’s key brands were resonating with consumers as he undertakes “the transformation of the business”.
“We are already making meaningful progress with the decisive actions required to return to a path of sustainable, profitable growth,” he said.
Under its new CEO, Treasury Wine has announced a turnaround plan targeting annual savings of A$100mil over the next two to three years, including by cutting inventories to protect demand and the reputation of its brands.
It comes after a difficult few years for the company following weaker-than-expected demand in China and supply disruptions in the United States, sending shares spiraling over the past year to their lowest point since 2011.
Treasury Wine traces its origins back to the mid‑19th century, when a wave of European settlers began planting vines across Australia’s most promising wine regions.
Its oldest roots lie in the historic Penfolds winery, founded in 1844 by Dr Christopher and Mary Penfold in South Australia, and in a collection of other pioneering estates that would later be brought together under the Foster’s Group umbrella.
The modern company, Treasury Wine Estates, formally emerged in 2011 when Foster’s spun off its wine division into a standalone business – a move that allowed the new entity to focus entirely on premium winemaking, global brand building and expanding its international footprint. — Bloomberg
