Treasury Wine Estates, one of the world's biggest winemakers and owners of brands such as Penfolds, Wolf Blass, Rosemount and Beringer, has warned its pre-tax earnings for 2013 will be worse than originally forecast due to bad weather, higher corporate costs and trading difficulties in the US.
The winemaker said in a statement to the Australian Securities Exchange early today it now expected constant currency pre-tax earnings to be below the same period in fiscal 2012 by approximately 20 per cent.
At the release of Treasury Wine Estate's full-year results earlier this year the company stated that pre-tax earnings growth for fiscal 2013 would be below the average of the past two financial years on a constant currency basis - which corresponded to 15.8 per cent.
Its shares were down 5.5 per cent, or 30 cents, to $5.20. Since January Treasury Wine Estates shares have risen from $3.50 to a high of almost $5.50 last week – a gain for the year of 60 per cent.
Treasury Wine Estates this year reported a full-year profit after tax and before one-off items of $135.5 million. It reported pre-tax earnings of $91.7 million for the first half of financial 2012. During the 2011-12 year it booked a $40 million charge related to new IT systems.
Treasury Wine Estates was spun out of iconic brewer Foster’s last year and will hold its annual general meeting in Melbourne later today. The company said in its ASX statement that a number of factors would hurt its earnings this year with the winemaker encountering a slower-than-expected first quarter trading performance.
‘‘As previously stated, our fiscal 2013 performance is impacted by the weather affected 2011 vintages in Australia and California, which saw fewer wines produced and at a higher cost.
"Also impacting fiscal 2013 are higher corporate costs driven by the need to build a standalone IT system following demerger. In addition, Treasury Wine Estates continues to work with our distributor partners in the USA to reduce the level of inventory carried in fiscal 2013."
Treasury Wine Estates said in light of these challenges and a slow first quarter trading performance in Australia and the Americas region, the company was forced to further refine the guidance provided at the full year results.
Treasury Wine Estates said that notwithstanding the slower start to the current financial year, the company expected constant currency pre-tax earnings growth for the full year to be in the mid-single digit range.
‘‘We reiterate our positive outlook for fiscal 2014, underpinned by the iconic wines crafted from an exceptional 2012 vintage and a strong increase in non-current inventory. Treasury Wine Estates remains well positioned to satisfy growing consumer demand for [its] luxury and masstige wines in both existing and new markets.’’