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Treasury to slash supply chain costs by $30m
Treasury Wine Estates (TWE) has entered the second phase of streamlining its supply chain, announcing plans to sell off up to AU$30 million worth of assets.
The company announced late last year that it would be slimming down its portfolio by off-loading “non-priority” brands in order to concentrate in its high-end brands. This followed a crushing loss of $100 million (£56m) in its 2014 end of year results, prompting plans to restructure its business by newly appointed CEO Michael Clarke.
Announcing its 2015 full year results in August, the company posted a net profit of AU$77.6 million after tax, up $178.5m on last year. In Asia, profits were up by 52% to
As TWE continues to restructure its business, this week the company announced it would be stripping a further $30 million in costs from its supply chain by reducing complexity and consolidating its infrastructure.
The changes, which will cost around $14million to implement, are expected to deliver annual savings of $30 million per annum by 2020. It will include a non-cash asset write-down of $20 to $30 million relating to vineyards, wineries, packaging and warehousing facilities which have been earmarked for closure or sale.
Michael Clarke, TWE’s chief executive officer, said: “The accelerated momentum in our business continues to be delivered across all regions, most notably Asia. TWE’s strategy of driving top line momentum, investing in our priority brands, enhancing both existing and new routes to market while reducing cost and complexity is continuing to deliver improved returns for our company and for our shareholders.”
“Today’s announcement demonstrates that we are successfully transitioning TWE from an order-taking, agricultural company to a more efficient, brand-led marketing organisation”, he added.
Treasury Wine Estates, which owns brands including Penfolds, Wolf Blass and Rosemount Estate, has already sold its Asti Winery, its Souverain brand and inventory, and vineyard assets in California’s Sonoma County to E & J Gallo Winery.