Treasury Wine Estates' annual profit jumps on Asia thirst

Treasury Wine Estates' annual profit jumps on Asia thirst

Thu, 16/08/2018 - 09:33
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Mike Clarke

Mike Clarke has driven a successful change in Treasury's export strategy. Photo: Treasury Wine Estates

Treasury Wine Estates has lodged a profit lift of 34 per cent, as surging demand in Asia helped it overcome delays getting product cleared through Chinese customs.

Net profit for the world's biggest listed winemaker was $360.3 million for the year to June 30, compared with $269.1 million the previous year. That beat expectations of $347.9 million, according to the average forecast of five analysts polled by Thomson Reuters.

The owner of the Penfolds, Wolf Blass and Lindemans labels said it will pay a final dividend of $0.17 per share, compared with $0.13 the previous year.

Under chief executive Michael Clarke, Treasury has staged a recovery since a disastrous foray into the US saw it throw out thousands of cases of cheap wine and fend off two takeover offers from private equity firms in 2014.

The company has since re-entered the US market for mid-range product, which it calls "masstige" wine, by buying the wine business of global drinks company Diageo Plc.

Treasury said US revenue fell over 13 per cent after a one-off $25 million adverse earnings impact from certain changes to its sales model in the United States.

Meanwhile, segment revenue from Asia rose 39 per cent, riding soaring Chinese demand for Australian wine, up nearly two-thirds in 2017.

In May, however, the company warned it was experiencing delays having some Australian wine exports cleared by Chinese customs, amid a diplomatic dispute between Australia and its biggest trade partner.

On Thursday, Treasury said industry delays on Australian wine imports into China in the fiscal fourth quarter "appear to have abated."

Treasury also reiterated guidance of about 25 per cent growth in its fiscal 2019 earnings before interest and tax.