• 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 Estates H1

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.