Global wine group Treasury Wine Estates has posted a lower-than-expected earnings result after a “challenging year”.
The winemaker reported growth in its Asian region, continuing inventory problems in the US and a quality 2013 vintage in South Australia and Victoria.
Net profit for the group in the 12 months to June 30 rose to $136.8 million, up 1 per cent from $135.5 million in 2012.
Sales revenue of $1.69 billion was up 2.9 per cent from $1.64 billion in the previous year.
The group will pay a dividend of 13 cents, in line with its 2012 distribution.
“As expected, fiscal 2013 was a challenging year for TWE compounded by the tough decisions taken to address excess inventory in the US,” Treasury’s chief executive David Dearie said in the full year results statement today. “The EBITS result of $209.2 million is below the earnings provided on 15 July due to a non-cash, unrealised loss on foreign exchange options of $7.0 million.
“While fiscal 2013 was a challenging year for TWE, the fundamentals of the global wine industry have not changed.
“The supply and demand cycle is moving towards balance and global consumer demand for premium wine brands continues to grow.
“We remain focussed on investing in and supporting our portfolio of iconic brands, with planned brand building investment expected to increase significantly in fiscal 2014 as we continue to drive higher volume and sales growth.”
Dearie said moves to shift excess commercial inventory in the US is expected to impact this year’s earnings by up to $30 million.
“With many variables in fiscal 2014, TWE is providing EBITS guidance in the range of $230 million to $250 million. This accommodates the reduction of shipments in the US and current Australian Dollar spot rates.”
The company’s marketing of Penfolds premium wines into Asia has paid dividends.
“Asia enjoyed another year of strong EBITS growth, up 35.6 percent to $54.5 million as TWE allocated more of the 2013 Penfolds luxury and icons release to meet growing consumer demand in to the region,” the report said.
“TWE outperformed the Australia, New Zealand and imported wine category in key Asian markets, demonstrating a continued focus on execution and the benefits of increased investment in brand building and people.”
In its outlook Treasury Wine Estates said the 2013 Australian vintage was excellent.
“Growing conditions were generally dryer and hotter than in recent years.
“TWE’s intake of masstige and luxury fruit in 2013 is in line with the 2012 intake and TWE is particularly excited by the size and quality of the intake of popular varietals including South Australian and Victorian Shiraz.”
