Former Foster's wine business Treasury Wine Estates blamed a poor 2011 vintage for an expected 20% reduction in earnings in the first half of the company's financial year.
Speaking at the company’s first AGM since its spin-off from the broader Foster’s business 12 months ago, CEO David Dearie told investors: ‘It’s also worth remembering that we have Mother Nature as one of our business partners, and the production of wine remains heavily influenced by many external elements.
‘An example of this was the 2011 vintage, which was negatively impacted by wet weather both here in Australia and also in California, ultimately reducing the quantity of wine available for sale in this fiscal year and increasing our costs.’
The need to implement a new IT system for the company, which owns Penfolds, Beringer, Rosemount and Lindemans, following the split from Foster’s, as well as a reduction in inventory levels by Treasury’s US distributors, was also blamed for the likely earnings decline.
But Dearie said earnings would begin to recover in the second half of the year, before rebounding further in fiscal 2014 – which should beat the results of the past two years, ‘as we begin to see the benefits of an exceptional 2012 vintage’.
‘We enjoyed near-perfect growing conditions in Australia, and the recent California harvest looks likely to produce an excellent vintage too,’ he added.
Written by Richard Woodard