Treasury Wine Estates flags heavy pandemic hit, updates on Penfolds demerger
Penfolds maker Treasury Wine Estates has announced a swingeing downgrade, saying it expects to report a 21 per cent slump in its earnings for 2020 due to the impact of the coronavirus.
Treasury Wine said in an earnings update it was still investigating a potential demerger of its successful Penfolds brand by the end of the 2021 calendar year in order to streamline the business.
Treasury said it was still investigating a potential demerger of its successful Penfolds brand by the end of the 2021 calendar year.Credit:Tamara Dean
After previously issuing guidance of earnings before interest tax and and the agricultural accounting standard SGARA (Self-generating and regenerating assets) growth in 2020 of between 5 per cent and 10 per cent, Treasury said it now expects it to fall up to 21 per cent to between $530 million and $540 million.
The pain was felt across Treasury's businesses in Australia, China, the Americas and Europe. where retail sales of its products were hampered by government restrictions. Treasury's troubled American business, which has suffered due to a large number of senior executive departures over the past few years, recorded a 37 per cent decline in earnings, while earnings in its Asia business declined 14 per cent and its Australian/New Zealand business recorded a 16 per cent earnings decline in part due to "extreme heat" during the bushfire ravaged summer months.
Treasury said it could not give any guidance on its 2021 earnings due to the pandemic.
The earnings update was the first formal announcement by Treasury's new chief executive officer Tim Ford who stepped up from chief operating officer on July 1 following the retirement of long-time CEO Mike Clarke.
Mr Ford said fiscal 2020 had been a unique period but he was hopeful Treasury would recover strongly.
"While it is right to remain cautious on the near-term outlook, given uncertainty remains around the timing and pace of recovery in our key markets, we remain optimistic around our return to both margin and profit growth," he said.
"We will continue to remain agile and opportunistic, diverting resource and focus appropriately
to markets and sales channels as consumer and shopper behaviour adjusts, and government
mandated restrictions change."