TWE wine sales lower, but earnings up
Wine supplier Treasury Wine Estates (TWE) says sales of wine by volume have fallen, and net sales revenue is down as consumers remain sullen, but earnings are up.
TWE's brands include Penfolds, Wolf Blass, Lindeman's, Beringer and Rosemount.
Treasury Wine on Friday reported a 54.4 per cent jump in reported net profit for the first half of the 2011/12 financial year to $40 million, from $25.9 million in the prior corresponding period.
Reported revenue rose 17.6 per cent to $876.0 million from $745.1 million.
But the company said the reported figures were of little comparative value because the businesses that were part of TWE before and after its demerger from Foster's Group in May 2011 were different.
In the prior corresponding period - the first half of the 2010/11 financial year - TWE was still part of Foster's.
TWE said that taking into account the changes, net sales revenue on a reported currency basis had fallen 7.4 per cent to $858.1 million, and earnings had lifted 0.2 per cent to $91.7 million.
On a constant currency basis, net sales revenue fell 2.6 per cent, and earnings lifted 16.5 per cent.
Volumes fell 6.2 per cent to 16.9 million nine-litre cases from 18 million nine-litre cases.
TWE chief executive David Dearie said TWE had reported a 0.2 per cent lift in earnings despite subdued consumer confidence, reduced retailer inventory in Canada, an increasingly competitive retail environment and a strong Australian dollar.
"In August 2011, I set out the fiscal 2012 strategic priorities for TWE: namely, to build exceptional brands, to drive top-line growth and to apply and practise cost management," Mr Dearie said in a statement on Friday.
"I'm pleased with the actions weve taken, and during the balance of fiscal 2012, we expect to make further progress on each of these priorities."
TWE said the fall in volumes in the first half was primarily a result of dropping unprofitable volume in the United Kingdom, where total volumes fell by 1.1 million cases.
The Americas also recorded a small fall in volumes.
Declines in sales revenue occurred in the Americas; and Europe, the Middle East and Africa.
Sales revenue in Australia and New Zealand was flat but grew in Asia.
TWE said the higher value of the Australian dollar had reduced earnings by about $12.8 million.
But price increases and cuts to costs had improved margins.
TWE said Asia, led by China, continued to be a "standout" growth area for TWE, with volume up 36 per cent in China and eranings up 66.7 per cent for the region.
TWE would allocate more funding for brand-building initiatives, and more wine brands would be released in Asia.
"We are currently increasing the size of our China-based team who will act as our brand ambassadors and educators and will greatly improve our brand-building activities," Mr Dearie said.
TWE declared an interim dividend of six cents per share, with 50 per cent franked.
At 1039 AEDT, shares in TWE were 23 cents, or 6.52 per cent higher, at $3.76.