Long suffering shareholders of Australia’s biggest wine producer received more disappointment and pain at the year end when it requested to have its shares suspended in Sydney. The company owns brands such as Penfolds, Lindemans, Wynns and Rosemount. Profits in 2013-14 will be Aussie Dollars 40m lower than it had predicted.
Treasury says it now expects full year profit to be between Aussie Dollars 190m and 120m compared with its previous forecast that profits would fange between Aussie Dollar 230m to 250m. Tresury had earlier pointed out that , because of weak shipments to the USA profits would be lower. Treasury also said the slowdown in China has curbed the demand for higher priced wines.
Readers will remember back in the 1990’s when under the Southcorp identity , it sought to meet a supply glut by cutting its prices. It continued to suffer under the ownership of the Fosters Beer Group where it suffered from under investment and poor management but hopes were raised in 2010 when it demerged as a stand alone company.
By last May its shares had doubled in price following a change of strategy to focus on premium brands and develop its market in China and Asia. It then had an awful seven months and the shares have halved their value. It also suffered the disaster of having to destroy Aussie Dollars 34m of bottled wine held in the warehouses of third party distributors to ensure the oversupply problem did not worsen.
It September, the former chief executive, David Dearie, was fired in the wake of embarrassing write- downs and stock control problems with Treasury chairman, Paul Raynor, installing one of his fellow directors, Warwick Every-Burns, as interim chief executive while a search for a new CEO took place. On top of all its troubles, Treasury is facing a class action from Australian shareholders over the stock writ-downs in which they allege that Treasury misled the market and the job search becomes even more difficult for the head hunters. The company denies the allegations but shareholders will want some firm news about where the company is going and who will be in the driving seat by the time it formally announces its half year results on 20th February.