But, company chief exeuctive Michael Clarke previously described 2015 as a “reset” year and the Australian wine producer’s latest financial results suggest improvement.
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Faced with a distributor inventory excess of roughly 3.5 million cases in 2013-which led the company to take a A$160 million writedown under former CEO David Dearie-Treasury slashed the oversupply by destroying almost 10% of it and utilizing A$61 million ($44.8m) of the writedown to facilitate the sell-off of almost 2 million cases.
The wine maker, with brands including Penfolds, Wolf Blass, Beringer, Lindeman’s and Rosemount Estate, made a net profit of $77.6 million for the year to June 30, up from a $101 million loss a year ago when it was hit with more than $280 million in writedowns.
“The team has achieved in just 12 months, what might reasonably be expected to occur over a two to three year period and for that, I would like to acknowledge and thank everyone at TWE for their hard work and commitment”.
In comparison, the Australia and New Zealand market grew earnings by 15 per cent to $84.4 million, and the Americas reported steady earnings at $93.2 million. Eleven of the company’s 15 priority brands posted net sales growth, compared to six in fiscal 2014.
Fierce competition was also a factor in the United Kingdom and Europe, where earnings slid by 50.5 per cent to $14.4 million because of pricing pressures in the lower-end commercial wines segment.
TWE also said it had started to reduce its portfolio of labels by 30 per cent so that it can focus on priority labels. Asia, and Greater China in particular, helped to lift sales.
“We enter fiscal ’16 with the most exciting pipeline of consumer marketing and innovation campaigns in the company’s history”.
“The fiscal year 2015 was a re-set year for our company; a year where substantial strategic, operational and cultural change was embedded to enhance the quality and sustainability of TWE’s base business”.
“Today’s results demonstrate that we have done just that”.
“Our focus at TWE is to build the company to be a fitter, stronger business regardless of currency”.
“Because we have a great portfolio of winemakers around the world we’ve been able to design the wine in a way that there is a consistency in the taste”, Mr Clarke said.
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“As we execute our strategic roadmap, we are confident that TWE will generate high-teens EBITS margins by fiscal 2020”.
