AUS: Treasury Wine Estates lines up AUD260m writedown for "reset year"
TWE will seperate mainstream and premium wine in Australia & New Zealand
Treasury Wine Estates has flagged a AUD260m (US$243.6m) writedown in fiscal 2014 as it looks to “reset” with a raft of structural changes.
The impairment charge, announced earlier today (25 June), follows a AUD160m writedown last year and is part of a shake-up under new CEO Michael Clarke. Clarke has been charged with turning around the company as it battles a volatile global wine market and a struggling US unit.
The company said the "non-cash brand and related-asset" impairment reflects the "combination of historical prices paid for pre-demerger acquisitions and the decline in market growth rates for commercial wine globally; and relates to the company’s commercial brands, IT, plant and equipment assets".
Clarke added: “Today’s announcement of an asset impairment further highlights the need for TWE to do things differently. The current business model is not being optimised and fails to reflect the company’s outstanding capability, brands and people.”
Clarke, who described fiscal 2015 as a “reset year”, announced other changes, including splitting TWE's luxury and mainstream wine in Australia & New Zealand into two units. The move will “deliver greater focus”, the company said, and echoes a similar strategy at its Americas unit.
“The commercial wine market is markedly different to that of luxury & masstige and we need to consider new operating models and ways of working to realise growth and improve profitability across both,” Clarke said.
TWE's Australian & New Zealand (ANZ) business will now be jointly run by Angus McPherson, currently Australia GM, who will lead TWE’s Australian commercial portfolio together with CMO Simon Marton. Marton will lead the team focused on TWE’s Luxury & Masstige portfolio.
TWE will also manage its Asia and Europe, Middle East & Africa (EMEA) regions separately to ANZ. Andrew Carter, CCO for APAC & EMEA, “has decided to leave TWE” as a result of the change.
Futher measures announced today include an earlier release date for TWE's Penfolds Bin series and icon & luxury collection wines. Clarke said the move to October from the final quarter of the fiscal year will “ensure Penfolds wines are available for sale over a much longer trading period and help TWE establish a more sustainable business mode”.
TWE has been subject of speculation in the past few months over a possible sale. Last month the Penfolds producer revealed it had received a US$2.85bn offer for a takeover by private equity group Kohlberg Kravis Roberts & Co. TWE rejected the bid, but did not rule out considering other offers.
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