Lower luxury sales during Covid-19 restrictions impacted Treasury Wine Estates (TWE) sales, with net profit down 25 per cent as a result.
In results released today, TWE said an “unfavourable volume and portfolio mix” during the second half to June, was driven by the closure of high-end restaurants and consumers trading down to lower-priced wines in some markets. Sales in the US were particularly impacted by the pandemic.
Total sales were down 6 per cent to $2.65 billion, while net profit attributable to shareholders was $315.8 million.
TWE’s key brands include Beringer, Wynns Coonawarra, Lindemans, Wolf Blass and Penfolds.
CEO Tim Ford said the last financial year was “a unique time” for the business.
“Our ability to navigate the disruptions of the Covid-19 pandemic through the second half and continue to deliver profitability and strong cash flow performance is representative of the fundamental strength of our global business.”
Earnings in the Americas declined 37 per cent as channels other than retail and e-commerce were closed to enforce social distancing. Earnings in Asia were down 14 per cent and in Australia and New Zealand by 16 per cent.
In Europe and the Middle East, a strong performance in the UK retail channel was offset by declines in continental Europe, the Middle East and Africa due to channel closures.
Meanwhile, the company said the Australian vintage volume was down by 30 per cent this year, with luxury wine intake down by 45 per cent. Higher production costs in Australia will likely increase the cost of goods by about 3 per cent per case, or $50 million. However the company has a stock of wine unsold which will ensure stable volumes in the market.