By James Atkinson
Treasury Wine Estates' net profit plummeted by 53 per cent for the year to June 30, reflecting the impact of the steps taken to destroy excess commercial inventory in the US.
TWE on Thursday reported net profit after tax (including material items) of $42.3 million, down from $89.9 million last year.
However, TWE chief executive David Dearie said that while the 2013 financial year had been challenging, the fundamentals of the global wine industry had not changed.
"The supply and demand cycle is moving towards balance and global consumer demand for premium wine brands continues to grow," he said in a statement.
"We remain focused on investing in and supporting our portfolio of iconic brands, with planned brand building investment expected to increase significantly in fiscal 2014 as we continue to drive higher volume and sales growth."
TWE's reported EBITS of $209.2 million was $7 million less than forecast in earnings advice provided on July 15, due to foreign exchange impacts.
Dearie said the US troubles were expected to impact the company's 2014 EBITS by up to $30 million.
"With many variables in fiscal 2014, TWE is providing EBITS guidance in the range of $230 million to $250 million," he said.
Analyst questions US obsession
Merrill Lynch analyst David Errington once again questioned why the company is placing so much emphasis on the US assets, which he has previously argued are non-core to the company's future growth.
"I must say I'm getting tired of such an over-emphasis on the US. I mean I think you took 25 minutes out of your 45 minute presentation [to discuss the US]," Errington told Dearie.
"I am concerned about more management time and effort on an asset that effectively is not adding a great deal of value to TWE," Errington said.
Dearie responded: "I think we needed to provide some clarity, and hopefully we've done that."