By Nausheen Thusoo
(Reuters) – Australia’s Treasury Wine Estates said on Tuesday it was well positioned to deliver growth in fiscal 2024 after the winemaker reported a 3.3% fall in annual profit, mainly hurt by lower sales in the United States.
The Melbourne-headquartered company expects demand for luxury wine to grow globally this year, led by its Penfolds label, and with potential upside from improving relations between Australia and China.
However, luxury wine sales growth is expected to be modest in its highest revenue-generating segment, Treasury Americas, before picking up from 2025.
“Outlook commentary appears to support consensus forecasts for Treasury Wine with potential additional upside from improved China relations,” analysts at Jefferies wrote in a note.
Treasury said continued improvement in Australian and Chinese relations after a years-long diplomatic freeze could see a lifting of Chinese tariffs on Australian wine.
The world’s biggest standalone winemaker previously drew a third of its profits from China before anti-dumping and subsidy tariffs of up to 212% were imposed on Australian wine, effectively ending sales, in 2020.
Treasury shares were up as much as 1.8% during early trade, while the broader market was 0.4% higher.
Australia’s largest wine maker reported a net profit after tax of A$254.5 million for the year ended June 30, compared with A$263.2 million a year earlier, with a fall in premium products shipments and low availability of luxury wines pressuring sales at Treasury Americas.
The wine maker had previously flagged challenging market conditions and a weak consumption outlook for its commercial-grade wine, especially in Australia and Britain, which it reiterated on Tuesday.
Treasury Wine declared a final dividend of 17 Australian cents per share, higher than last year’s dividend of 16 cents.
The company also said it had appointed John Mullen as its chairman. He will succeed Paul Rayner, who will leave the company on Oct. 16.
Rayner had been associated with the company for more than a decade and started as a non-executive director of Treasury Wine since May 2011.
(Reporting by Nausheen Thusoo and John Biju in Bengaluru; Editing by Shounak Dasgupta and Stephen Coates)