Treasury Wine Estates slumps after shipment restrictions hit HY earnings
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More news: Shares in Treasury Wine Estates slumped in morning trade after reporting a 44% net loss and suspending its interim dividend in the first-half, weighed down by an impairment charge and shipment restrictions in China and the US.
Shares fell 5.15% to $4.97 at 12:32pm AEDT.
Jarden analysts Ben Gilbert, Kseniya Chadayeva and Isabella Lopopolo said the company's balance sheet remains stretched amid weak wine demand, adding Treasury Wine Estates needs to increase product shipments to rebalance excess inventory across Asian markets.
The analysts said they remain cautious in the near term, with limited catalysts outside of potential M&A, and noted that the decision to suspend the dividend has brought balance sheet back in focus. They set a target price of $5.40 and maintained a neutral rating.
Treasury Wine Estates posts after tax loss of $649.4m, slashes dividend
The news: Australia’s top winemaker Treasury Wine Estates reported a first-half statutory net profit after tax loss of $649.4 million, reflecting post-tax material items loss due to a non-cash impairment of US based assts.
The numbers: The profit loss exceeds average forecasts of a $171 million net loss, according to Visible Alpha.
Net sales revenue fell 16% to $1.29 billion, above analysts' estimates of $1.21 billion.
The company has suspended its interim dividend to preserve the capital and reduce leverage. Consensus had estimated a dividend of 9.5 cents per share.
Earnings before interest and tax (EBIT) fell 39.6% to $236.4 million.
The context: Treasury Wine attributed the profit decline to a post-tax impairment charge of $751 million against its US-based assets, citing continued moderation in US wine category trends and more conservative long-term growth assumptions.
The drop in EBIT was driven by shipment restrictions in China and the US, as well as the cycling of prior year shipments.
What they said: "Today's results come at a time when we are already making meaningful progress with the decisive actions required to return TWE to a path of sustainable, profitable growth," Treasury Wine CEO Sam Fischer said.
"Our focus is firmly on the future to strengthen execution and ensure we build a stronger, more resilient business for the long term."
The sources: ASX, Jarden analyst note
