AUS: Sales, profits slide in H1 for Treasury Wine Estates

By Olly Wehring | 28 February 2013

Half-year net profits fall by 23.2% to AUD45m (US$45.9m)
Net sales in six months to end of December dip by 3.4% to AUD816.9m
Profits before interest and tax and one-off items (EBITS) tumble by 20% to AUD73.4m
Volumes slip by 2.5% to 16.5m cases

Rising costs stemming from a tough harvest hampered Treasury Wine Estate's H1

Treasury Wine Estates has posted a marked fall in net profits for the first half of its fiscal year, with sales also slipping in the period.

The Australia-based company, formerly part of Foster's Group, said earlier today (28 February) that net profits on the six months to the end of December came in 23.2% down on the corresponding period a year earlier, totalling AUD45m (US$45.9m). Sales fell by 3.4% to AUD816.9m, while profits before interest, tax and one-off items fell by 20% to AUD73.4m.

The performance is in line with Treasury's warning late last year that earnings in the half-year would be down by around 20%.

A one-off gain of AUD6.1m, relating to - among other things - a fair value adjustment to one of its New Zealand winery countered a one-off loss of AUD11.6m in H1 of 2011. Factoring in these numbers, net profits were up by 30.8% at AUD52.3m.

CEO David Dearie acknowledged the earlier forecast and highlighted rising costs for hampering performance. "“I am pleased to report that first half EBITS ... is in line with guidance provided at the Annual General Meeting in 2012," he said. "This result was impacted by a significant COGS (costs of goods sold) increase, up AUD2.24 per case, principally driven by the weather affected 2011 vintage, and a challenging retail landscape."

Looking to the rest of the fiscal year, Dearie said: "The global wine industry outlook remains positive as consumers continue to seek out more premium wine, and TWE will continue to invest for future growth by ensuring that we have the brands and quality wines to meet this increasing demand."

Treasury's share price rose markedly following the results, finishing today up by 8.2% at AUD5.30.

To read the company's official statement, click here.

Expert analysis

Treasury Wine Estates Ltd in Wine (World)

Treasury Wine Estates became an independent company following the demerger of Foster’s Group’s wine and beer unit in 2011. Due to challenging conditions in the company’s key markets in North America, Western Europe and Australasia, it has restructured its business, switched its focus from volume to value generation, and is committed to further expansion to fast-growing markets, particularly in Asia Pacific. This profile examines how the company can enhance its growth prospects going forward.

Sectors: Company results, Wine

Companies: Treasury Wine Estates, Foster’s

View next/previous articles

28 Feb 2013 -

UK: Bruichladdich makes good on production pledge

28 Feb 2013 -

UK: Arran Brewery says grant refusal bad for Scotland

Currently reading -

AUS: Sales, profits slide in H1 for Treasury Wine Estates

28 Feb 2013 -

US: Monster Beverage FY profits, sales still healthy despite slower growth

28 Feb 2013 -

EUROPE: Pernod Ricard reveals Europe, Chivas Brothers exec job swap

There are currently no comments on this article

Be the first to comment on this article

Related research

Treasury Wine Estates Ltd in Wine (World)

Foster’s Group Ltd in Wine (World)

Foster’s Group is the fourth largest wine company in the world and the leading brewer in Australia. In 2010, the company has transformed its business and announced its plan to demerge its wine and beer operations, which has led to much speculation ab...

Foster's Group Limited - SWOT, Strategy and Corporate Finance Report

Foster's Group Limited - SWOT, Strategy and Corporate Finance Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service offerings, detailed financials, ...