Penfolds owner Treasury sees hope despite profits slide

Treasury Wine Estates has eased pressure on sales in the past six months by bringing forward the 2010 vintage release of Penfolds luxury wines, but profits still sank by 60%.

Treasury said it was extending its wine cabinet promotion to consumers beyond Australia.

Treasury’s chief executive, Michael Clarke, re-iterated that the Australian wine company was in a ‘re-set year’.

His comments came after Treasury reported a 60% slump in net profits, to A$42.6m, for the first half of its financial year, to the end of December.

Profits fared badly due to a $20m tax charge for the six months, which followed a $70.6m tax benefit in the same period of the previous year. Profits before interest and tax rose by 63%.

Clarke used the pre-tax earnings increase and sales figures to argue that the company has begun to turn things around, after falling into the red in its last financial year.

Net sales for the six months to the end of December rose by around 9% versus the same period of 2013, to A$882.7m.

A decision to shift the annual release date of the group’s luxury wines, including Penfolds Grange, lifted sales, the firm said. The 2010 vintage was released in October. Previously, new vintages of luxury wines were released in either March or May.

Clarke said Treasury was extending a promotion it ran in Australia in 2014, which offered a cut-price Vintec wine fridge to consumers who bought a six-bottle case of its luxury wines. The deal was being extended internationally, said Clarke, without naming the specific countries involved.

Clarke also said Australian wineries had been helped by a recent weakening of the Australian dollar versus the US dollar.

Written by Chris Mercer