Treasury Wine shares soar on profit result

Beringer, Wolf Blass, Penfolds and Wynns were among the growth brands in the company’s 15 priority labels, which achieved a 13% combined growth in sales.

Fierce competition was also a factor in the United Kingdom and Europe, where earnings slid by 50.5 per cent to $14.4 million because of pricing pressures in the lower-end commercial wines segment.

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.

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.

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.

The wine company today posted a net profit of $77.6 million in the year ended June 30, compared with a loss of $100.9m in the previous corresponding period.

“We enter fiscal ’16 with the most exciting pipeline of consumer marketing and innovation campaigns in the company’s history”.

“Because we have a great portfolio of winemakers around the world we’ve been able to design the wine in a way that there is a consistency in the taste”, Mr Clarke said.

“Fiscal 2015 represents the first successful year of TWE’s journey to transition from being an order-taking, agricultural company to a brand-led marketing organisation”.

The winemaker also reduced stock levels among its retailers and distributors across all of its four operational regions.

The strongest growth was reported in Australia-New Zealand and Asia with the company saying it had “successfully enhanced its routes-to-market” in Greater China, Korea and Singapore, as well as investing in Latin America, the Middle East and Global Travel Retail.

In the Americas, earnings were in line with the prior year, partly affected by the depreciation of the Canadian dollar relative to the US dollar. But TWE has created the Lindeman’s Gentleman’s Collection as a more profitable “masstige” wine – mass prestige wines priced at $10 to $20.

Mr Clarke also stripped out $40 million in costs from across the company, ahead of an original target of $35 million as administrative costs in the Melbourne head office were slashed.