Treasury Wine reports strong half-year profit

Treasury Wine Estates (TWE) has reported a net profit of AU$52.3 million (£35.3m) for the first six months of its financial year, to December 2012.

Treasury Wine EstatesThe result is a 30.8% improvement on the same period for the previous year and exceeds the group’s forecasted profit of $47m. Shares in TWE surged as a result of the announcement.

Earnings before interest and tax (EBITS) dropped by 20% to $73m as a result of the strong Australian dollar and an increase in the cost of goods sold (COGS).

TWE’s chief executive David Dearie said: “I am pleased to report that first half EBITS of $73.4 million is in line with guidance provided at the Annual General Meeting in 2012.

“This result was impacted by a significant COGS increase, up $2.24 per case, principally driven by the weather affected 2011 vintage, and a challenging retail landscape.

“However, we continue to invest for growth and during the first half we purchased 591 hectares of premium vineyards in South Australia and the Napa Valley, we also acquired the remaining 50% of what is now the Matua Marlborough winery and we increased our USA non-current inventory by 50%.

“These investments ensure TWE is well positioned to better satisfy the growing consumer demand for our luxury and masstige wines in existing and new markets.”

Dearie went on to say that the group will continue to focus on premium wines and that there are positive early indications for the 2013 Australian vintage.

He added: “The global wine industry outlook remains positive as consumers continue to seek out more premium wine, and TWE will continue to invest for future growth by ensuring that we have the brands and quality wines to meet this increasing demand.

“Overall the wine industry is edging ever closer to supply and demand balance with the poor 2012 vintage in Europe further reducing global supply. Early signs of the 2013 Australian vintage appear generally favourable with growing conditions characterised by low rainfall in winter and the growing season to date.”

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