Treasury Wine Estates released its half-year results earlier today

Treasury Wine Estates released its half-year results earlier today

Earlier today (20 February), Treasury Wine Estates released its results for the six months to the end of December. Here, just-drinks takes a closer look at the group's performance in the period by region:

Australia & New Zealand (ANZ)

The company saw its EBITS (earnings before interest, tax, SGARA and material items) in the ANZ region plunge by 30.1% on a constant currency basis, coming in at AUD24.4m (US$22m). TWE flagged lower volume, an increase in the cost of doing business in a “challenging” retail environment, planned investment in brand building, costs associated with the organisational restructure and lower earnings in New Zealand.

“In Australia, a change in the depth of promotional pricing combined with increased competitor activity in both the commercial and masstige sparkling and masstige white wine categories, significantly impacted volume in December,” said interim CEO Warwick Every-Burns. “Furthermore, a renewed focus on liquor inventory levels by some key customers in Australia adversely impacted volume growth in the December quarter and this is expected to continue in the second half of the fiscal year.”


Treasury had an equally torrid time in Asia, with EBITS falling by 63% to AUD4.9m. The firm highlighted the Chinese Government's introduction of austerity measures in 2012 as hampering performance, while a “significant decline” in consumer demand for premium wine in the country was also noted. Hong Kong, however, delivered “strong” growth in the half-year.

“Despite the challenging first half,” the company said, “TWE remains confident of solid long-term growth across Asia and has continued to invest in sales and marketing capability while increasing A&P investment by 8%, ahead of the 2014 Penfolds release.”


The reduction in US shipments, previously announced in July, was joined by higher COGS (costs of goods sold) in driving down EBITS by 46.2% to AUD24.6m in the region. Despite this, promotional campaigns for the Beringer Classics, Lindeman’s, Chateau St Jean and Beringer Founders Estate brands were credited with generating “strong consumer response” in the half-year.

“The US distributor inventory realignment is progressing,” said TWE. “The destruction of old and obsolete wine was delayed due to the US Government shutdown which prevented applications to the US Alcohol and Tobacco Tax and Trade Bureau being processed.”

Europe, Middle East & Africa (EMEA)

TWE's EBITS in the EMEA region fell by 27% to AUD10.7m, thanks to “increased brand-building investment” and “adverse” COGS per case. “Soft” trading conditions in the Nordic region were also highlighted, although the region generated volume growth.