Finance Finance News Treasury Wine makes $101m loss

Treasury Wine makes $101m loss

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Treasury Wine Estates has suffered a $100.9 million full year loss after a tumultuous 12 months that included takeover bids, leadership changes and a major restructure.

The result for the owner of the Penfolds wine brand in the year to June 30 compared to a $47.2 million profit in 2012/13.

However, revenue rose by $61.8 million, or 3.6 per cent, to $1.8 billion.

The company reported a final dividend of seven cents a share, unfranked, taking full year dividends to 13 cents unfranked.

Chief executive Michael Clarke said Treasury had performed in line with its guidance and was “positioned for future success” after increasing marketing and cutting operating costs.

“Fiscal 2015 is a reset year for the company,” Mr Clarke said.

Mr Clarke said Treasury was already seeing benefits from its marketing efforts, with a wine fridge promotion for the Penfolds brand surpassing expectations.

The company’s $100.9 million loss was driven by $280.6 million in brand and asset impairment charges.

The impairments included a decline in market growth rates in the commercial wine sector and $35 million in expenses from Treasury’s cost-cutting program.

Mr Clarke said the US business would be a key growth platform as Treasury increases its presence in the fast-growing luxury category – a segment where it had previously suffered from supply constraints.

In Australia, the company said increased investment in marketing, plus separating the focus on the commercial and premium sales segments “is expected to drive sustainable sales and improved market execution in fiscal 2015 and beyond”.

Treasury’s earnings before interest, tax and SGARA (self-generating and regenerating assets tax treatment) were $184.6 million, down 14.6 per cent from the 2013 figure of $216.2 million.

Across its markets, Treasury reported a 31.5 per cent drop in earnings in Australia-New Zealand to $75.1 million; in the Americas earnings fell seven per cent to $74.9 million; European earnings were flat at $29.1 million; and in Asia, earnings of $47.7 million were down 12.3 per cent.

Treasury advised its much-publicised destruction of old and obsolete wines was complete.

Treasury said its “portfolio premiumisation” strategy had resulted in a 40 per cent increase in Luxury wine volumes in the second half of 2013/14 and delivered increases in net sales revenue per case.

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