By James Atkinson

Treasury Wine Estates (TWE) has this morning slashed $40 million off its earnings forecast for the 2013-14 financial year.

TWE announced its expectation that EBITS for the first half of fiscal 2014 would be in the range of $42 million to $46 million (based on unaudited financial accounts) compared to $73.4 million in the prior year on a reported currency basis.

The company said its decision in the Australian market to increase prices on some of its commercial portfolio, participate in less deep promotion initiatives across the portfolio over the Christmas period, together with significant competitive activity, resulted in higher than expected volume declines.

As foreshadowed by TheShout, the company said the impact of Chinese government austerity measures on its sales of premium wines in that market had intensified, resulting in a reduction in volume in that market.

“TWE does not expect to recover the first half shortfall and expects these challenges to continue in the second half,” it said.

“Therefore the company has lowered its EBITS guidance range for fiscal 2014 to $190 million – $210 million from its previous range of $230 million – $250 million.”

TWE said it had progressed during the half with the planned realignment of US distributor inventory by reducing shipments while total brand building investment increased across the group, particularly in Asia.

“Details of TWE’s financial performance for the first half of fiscal 2014, and the management actions to ensure a solid foundation for future profitable growth, will be provided to the market on 20 February 2014.”

Further analysis will be provided in tomorrow's full edition of TheShout.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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1 Comment

  1. So, when you ride the Tiger of buying market share, and try to get off (less deep promotion initiatives), it has its consequences. I really hope that TWE can recover in all markets, but feel that the company has to have a long and very hard look at how they do business, particularly with the supermarket chains in Australia and the UK.
    Treating wine as a FMCG is not a good underlying philosophy on which to base a company’s business in this industry.
    The previous CEO still has much to answer for.

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