By James Atkinson
Treasury Wine Estates (TWE) this week announced its earnings will be in the "mid-single digit" range this financial year as a result of factors including weather affected 2011 vintages in Australia and California.
Treasury said the tough vintages saw fewer wines produced and at a higher cost.
"Also impacting fiscal 2013 are higher corporate costs driven by the need to build a standalone IT system following demerger," it said.
"In addition, TWE continues to work with our distributor partners in the USA to reduce the level of inventory carried in fiscal 2013."
In light of these challenges and a slow first quarter trading performance in Australia and the Americas region, Treasury said it now expects constant currency EBITS to be 20 per cent down on the same period last year.
"Notwithstanding the slower start to the current financial year, we expect constant currency EBITS growth for the full year to be in the mid-single digit range," it said.
This contrasted with the company's prediction at its full-year results that EBITS growth for fiscal 2013 would be below the average of the past two financial years on a constant currency basis (which corresponds to 15.8 per cent), before rebounding to above average growth rates in fiscal 2014.
"We reiterate our positive outlook for fiscal 2014, underpinned by the iconic wines crafted from an exceptional 2012 vintage and a strong increase in non-current inventory," the company said.
"TWE remains well positioned to satisfy growing consumer demand for TWE's luxury and 'masstige' wines in both existing and new markets."