Destroying wine in US hits Treasury profits

(Decanter) - Profits at Australia's Treasury Wine Estates (TWE) more than halved in the past year, due in part to the company's decision to destroy large amounts of wine in the US.

Penfolds, Lindemans and Rosemount owner Treasury, the former Foster’s wine business which also owns California’s Beringer, incurred a A$154.7m charge linked to over-supply to the US market.

Net profit in the 12 months to 30 June fell 53% to A$42.3m, from A$89.9m last year, and despite reported growth in three out of the company’s four regions: EMEA (Europe, the Middle East and Africa), Asia and Australia/New Zealand.

Revenues rose 4.8% to A$1,760.7m and the company sold 32.1m cases of wine, nearly 1% up on last year’s volumes of 31.8m cases.

‘As expected, fiscal 2013 was a challenging year for TWE, compounded by the tough decisions taken to address excess inventory in the US,’ said company CEO David Dearie.

However, the company highlighted improved performance in the UK, where Wolf Blass was a ‘key contributor’, and strong earnings growth in Asia, which was allocated more of the 2013 Penfolds luxury and icons release.

Dearie said: ‘The fundamentals of the global wine industry have not changed.