Treasury Wines Reports Net Loss as Revenue Misses Expectations

(Bloomberg) — Australian winemaker Treasury Wines Estates Ltd. reported lower-than-expected first-half earnings as supply chain challenges in the U.S. and negative consumer trends in China hit the luxury winemaker.

Treasury Wines, maker of the iconic Penfolds brand, reported a first-half net loss of A$649 million ($458 million) on Monday. This compares with a profit of A$221 the previous year. Net sales revenue fell 16% year on year to A$1.3 billion, falling short of analysts’ expectations of A$1.38 billion.

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But the company said it expects second-half earnings to be higher than the first half, based on its key EBITDA performance metric (a measure to smooth volatility in earnings before interest, taxes and agricultural valuations).

Chief Executive Sam Fischer, who took office in October, said despite Monday’s results he was encouraged by how the wine company’s key brands are resonating with consumers as he undertakes a “transformation of the business.”

“We are already making meaningful progress with the decisive actions needed to return to a sustainable, profitable growth path,” he said.

Treasury has announced a turnaround plan under its new CEO targeting annual savings of A$100 million over the next two to three years, including reducing stock to maintain demand and reputation for its brands. This follows a difficult few years for the company after weaker-than-expected demand in China and supply disruptions in the US sent shares spiraling last year to their lowest point since 2011.

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