AUS: Treasury Wine Estates hit by US writedown as FY profits dive
- FY net profits drop by 53% to AUD42.3m
- Net sales rise 2.9% to AUD1.69bn
- Operating profits (EBITS) flat at AUD209.2m
TWE saw an expected sharp drop in FY profits
Treasury Wines Estates (TWE) has reported a sharp drop in full-year net profits after a “challenging” year which included a AUD154.7m (US$139.7m) writedown in the US.
Net profits in the 12 months to the end of June fell by 53% to AUD42.3, the wine group said earlier today (22 August). Net sales in the period inched up by 2.9% to AUD1.69bn, while operating profits (EBITS) were flat at AUD209.2m.
It came after the company announced last month that it planned to destroy old and out-of-date stock in the US after admitting it had been “ambitious” in its forecasts for new products.
“The decision to reduce inventory levels in the United States is designed to protect TWE’s brand health and assets in that crucially important market,” the company said today.
However, the group said today it saw “solid” brand profit growth in three of its four regions: Europe, the Middle East, Africa; Australia/New Zealand and Asia.
Looking ahead, chief executive David Dearie said: “While fiscal 2013 was a challenging year for TWE, the fundamentals of the global wine industry have not changed. The supply and demand cycle is moving towards balance and global consumer demand for premium wine brands continues to grow."
Tackling its excess US stock is expected to hit the group's 2014 numbers by up to AUD30m, Dearie added. with EBITS guidance for fiscal 2014 set at between AUD230m and AUD250m.
Shares in TWE today closed down 2.29% at AUD4.70.
To read the company's full statement, click here.
For a closer look at TWE's FY performance, click here.
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