Treasury Wine Estates has halved its profit to $42.3 million, with the winemaker’s bottom line hit hard after it destroyed old and excess stock in the United States.
Treasury this morning said the $154.3 million cost of dumping the wine and shipping fewer cases to the US was a ‘‘tough but necessary step to rebase the company’s operations in the US’’.
The move is reflected in its 2012-13 net profit, down 53 per cent from its $89.9 million 2011-12 result.
The company enjoyed solid brand and profit growth in other areas, with earnings up in Europe, the Middle East, Africa, Australia, New Zealand and Asia.
Treasury is Australia’s largest wine producer and owns a string of iconic brands, including Penfolds, Wolf Blass and Rosemount.
Chief executive David Dearie described FY13 as challenging, adding that the dumping of wine would continue to impact on the company by up to $30 million.
He said Treasury’s fiscal 2014 earnings were expected to be between $230 million and $250 million.
The guidance takes into account reduced shipments to the United States and changing currency exchange rates.
Nonetheless, Mr Dearie said Treasury’s top brands outperformed their rivals at awards and international wine shows throughout the year.
‘‘While fiscal 2013 was a challenging year for TWE, the fundamentals of the global wine industry have not changed,’’ he said in a statement. ‘‘The supply and demand cycle is moving towards balance and global consumer demand for premium wine brands continues to grow.
‘‘We remain focused on investing in and supporting our portfolio of iconic brands, with planned brand building investment expected to increase significantly in fiscal 2014 as we continue to drive higher volume and sales growth.’’
The company spent $67 million on land and winery acquisition throughout the year and increased its intake of ‘‘luxury fruit’’ from vineyards it owned or leased.
The company’s total production volume for the financial year was 32.1 million cases, up 300,000 cases on the previous year.
It’s net sales revenue increased almost three per cent to $1.7 billion.
The company declared a final, unfranked, dividend of seven cents.
TWE’s shares were down nine cents, or 1.9 per cent, to $4.72 in late morning trade.