- Treasury Wine Estates (TWE) takes a hit its profits as the impact of wine tariffs in China causes sales to slump
- The company recorded a 7 per cent fall in earnings before interest and tax to $262.4 million
- The company expects lower grape and bulk wine prices this year as it manages through high levels of inventory triggered by reduced sales in China
- During the half, the company reported capital expenditure of $58.6 million, which was mostly spent on South Australian luxury wine making infrastructure.
- Shares closed 11.7 per cent higher yesterday at $11.77 each.
Treasury Wine Estates (TWE) takes a hit to its profits as the impact of wine tariffs in China causes sales to slump.
The company recorded a 7 per cent fall in earnings before interest and tax to $262.4 million. When excluding sales to mainland China, this metric is up 28 per cent.
The company expects lower grape and bulk wine prices this year as it manages through high levels of inventory triggered by reduced sales in China.
Net sales revenue declined by 10.1 per cent to $1.3 billion.
Despite the issues within the Chinese market, Asia remains a standout region for the company’s Penfold arm of the business, with national sales revenue excluding China growing by 119 per cent.
During the half, the company reported a capital expenditure of $58.6 million. The majority of this spending was related to South Australian luxury winemaking infrastructure.
It has lowered its full-year capex guidance by $30 million to $120 million due to supply chain and labour constraints delaying the implementation of a number of projects.
The company said it remains committed to prioritising investment in technology, the sustainability agenda, and its luxury winemaking asset base in Bordeaux, France.
An interim dividend of 15 cents per share will be paid.
Chief Executive Officer Tim Ford said the company’s focus going forward is on growth.
“Following the past two years of significant change within TWE and the markets in which we operate, we have shifted our focus from a mindset of ‘recovery and restructuring’ to one of ‘growth and innovation’,” he said.
“We have great confidence that by leveraging the unique strengths of our business – our people, our brands and our asset base – we are well placed to capitalise on the significant opportunities across the global markets in which we operate.”
Shares closed 11.7 per cent higher yesterday at $11.77 each.