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AUS: Treasury Wine Estates swings to black in FY

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  • Full-year net profits reach AUD64.4m (US$67.2m), versus losses of AUD900m a year earlier
  • Net sales rise by 2% to AUD1.47bn
  • Operating profits, before tax and finance costs, hit AUD18.2m, from losses of AUD973.3m
  • Newly-demerged wine company is upbeat but continues to face challenges in key markets and tough currency 

Treasury Wine Estates has returned to profits in its latest full-year, but the newly-demerged wine group continues to face challenges from currency and consumer sentiment in key markets.

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Treasury Wine Estates' (TWE) volume sales remained under pressure for the 12 months to the end of June. On a pro-forma basis, excluding business lost or gained via the winemaker's demerger from Foster's Group, saw volumes drop by 6.6% on the same period of last year. 

In the Americas, a key market for the firm, volumes fell by 11%. A soft second-half "took the shine off a very solid first-half", TWE said. In the Europe, Middle East and Africa (EMEA) division, meanwhile, volume sales fell by 3.8%.

That said, TWE'S CEO, David Dearie, highlighted rises in the company's net sales per case in his upbeat assessment of the global wine market. "The fundamentals of the wine category are strong, driven by increasing consumption and premiumisation trends in our major markets, and within all price tiers in our portfolio," he said. TWE said that its luxury brands, such as Beringer Luxury, performed well in all business regions.

TWE returned to the black for the full-year, reaching profits of AUD64.4m (US$67.2m) versus losses of AUD900m in a previous year damaged by impairment charges. Net sales rose by 2%, to AUD1.47bn.

However, on a pro-forma basis, net sales fell by 7% for the 12 months. Unfavourable currency exchange rates also wiped AUD30m off TWE's profits, it said.

Over the next year, TWE said that it will increase its focus on brands and will seek to stabilise volumes in the Americas and EMEA divisions. Dearie added: "TWE is highly cash generative, and this, together with our strengthened balance sheet, provides significant operational and financial flexibility."

For the company's announcement, click here.


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