Treasury posts earnings above expectations

Treasury Wine Estates has reported a strong first half of this financial year, with preliminary accounts above analysts’ expectations.

C EO Michael Clark said unaudited earnings for the six months ending 31 December 2015 would be in the range of A$140-150 million – above the A$120 million predicted by analysts.

The Australian-based business now expects the full year to see EBITS in the upper end of its guidance range of A$270-290 million.

Clark said the result were strong across all regions, but noted the “pleasing” performance of its Asia business.

“We benefited from increased shipments to the region ahead of Chinese New Year in February,” he said.

In November the company got the go-ahead to acquire Diageo’s wine business for around £361m, which includes brands such as Blossom Hill in the Percy Fox business, Piat d’Or and Sterling Vineyards and the Chateaux & Estate Wine business in the US.

The company noted the integration of the new acquisitions was progressing well, adding that the second half of the financial year would be a “re-set period” for the Diageo Wine business. It reiterated its intention to accelerate investment in consumer marketing while also delivering a “more sustainable base business”.

Clarke has previously commented that the acquisition of Blossom Hill would help TWE to deliver the scale and critical mass required to boost its commercial businesses, which would boost its Luxury and Masstige segments in the USA.

In October, TWQE announced the second phase of it strategy to slash costs by streamlining its supply chain, and selling off up to AU$30 million worth of assets to concentrate on its core business.