TWE Shares Resume Trading, But Fall Sharply After DowngradeJanuary 30, 2014
Treasury Wine Estates (TWE) shares resumed trading on the Australian Stock Exchange earlier today, but their price fell sharply after the company announced a $40 million profit downgrade for the current fiscal year following weak sales during the holiday season. After halting trading in its shares earlier this week while it reviewed preliminary financial results for its fiscal first half (ending December 31, 2013), TWE revised its full-year profit forecast, saying it’s now projecting earnings in the A$190-A$210 million ($217-$239m) range—down from its previous projection of A$230-A$250 million ($262-$285m). TWE’s shares finished trading today at A$3.64 ($4.15)—a 20% drop from their A$4.55 ($5.19) price prior to the trading halt.
TWE endured an extremely difficult first half, which essentially began in July 2013 with the announcement that the company was taking A$160 million ($182m) in writedowns related to an inventory glut in the U.S. market. In September, David Dearie was forced out as CEO, while Warwick Every-Burns, a TWE board member, became interim chief executive as the company began a search for a replacement that continues today. Then, TWE finished calendar-year 2013 on a down note, as higher prices led to soft sales in Australia while austerity measures in China have impacted the company’s high-end business there. TWE is estimating first half earnings (before interest and tax) at A$42-A$46 million ($48-$52m)—down about 40% from the year-earlier period.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.