Treasury Wine Estates finishes draining US stocks

Treasury Wine Estates, which owns brands including Penfolds, Wolf Blass and Rosemount Estate, has offloaded a number of assets in a continued bid to simplify its supply chain across the US and Australia.

Treasury chief executive Michael Clarke, who has now been in the job for 16 months, said he would focus on cutting the business’s costs, and shifting the company’s portfolio of brands toward the premium end of the market.

The weaker Australian dollar also lowers the cost of bottles produced in Melbourne-based Treasury’s home country and increases the value of earnings from overseas.

Statutory net profit for the full year was $77.6 million, an improvement of $178.5 million on the previous $101 million loss.

“The team has achieved in just 12 months, what might reasonably be expected to occur over a two to three-year period”, Mr Clarke said.

The strong result from Asia meant Treasury was able to surpass analysts’ expectations and triggered a sharp jump in its share price of more than 11 per cent on Wednesday morning to hover around $6.15.

Treasury enjoyed solid growth in the Americas, with net sales revenue up by 8.6% on 1% shipments growth (depletions rose by 0.7%).

TWE also said it had started to reduce its portfolio of labels by 30 per cent so that it can focus on priority labels. Eleven of the company’s 15 priority brands posted net sales growth, compared to six in fiscal 2014.

“Fiscal 2015 was a re-set year for our company – a year where substantial strategic, operational and cultural change was embedded to enhance the quality and sustainability of TWE’s base business”, Mr Clarke said.

“Today’s results demonstrate that we have done just that”.

“Fiscal ’15 demonstrated TWE’s commitment to delivering strong results on a sustainable business model and I’m pleased to report that our distributor inventory realignment program in the United States is now complete”.

“This is a region that I would say has probably been scary for Treasury Wine in the past”, Mr Clarke said.

“TWE enters fiscal 2016 with the greatest pipeline of consumer marketing programmes in place in the Company’s history, including brand innovations and campaigns”. Anticipating a successful execution of its strategic roadmap, the company expects to generate EBIT margins – the propertion of revenue still standing after operating expenses – in the high-teens by the 2020 financial year.