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Penfolds owner TWE hails profits turnaround

The fortunes of Penfolds and Beringer owner Treasury Wine Estates continued to improve with a doubling of the company’s net profits in the year to the end of June.

Treasury’s profits reached A$179.4m for the year.

They were boosted by the contribution of brands including Sterling Vineyards and Beaulieu Vineyards, which it bought as part of a US$600m deal with drinks giant Diageo last October.

Sales in the year ending 30 June were up by just over 20% to A$2.23bn, while volumes rose 12% to 33.6m nine-litre cases.

Treasury said sales in Asia and Australia had risen strongly in volume terms. But this was offset by the company’s decision to leave ‘unsustainable’ lower-priced business in the UK and the US.

Barring the contribution from the newly-acquired Diageo brands, Treasury’s sales were up 9.4%.

That still signalled a continued recovery in the company’s fortunes from the nadir of 2013 and 2014, when it was hit by a series of charges. It was forced to destroy or discount millions of bottles of excess wine in the US.

That prompted a series of private equity bids for the business. Treasury’s share price has since surged and was up 11% following its latest results release.

‘Our results demonstrate that momentum across our business is accelerating,’ said Treasury CEO Michael Clarke. ‘TWE is now delivering consistent earnings growth.’

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