Treasury Wine Estates Limited (ASX: TWE), a wine company headquartered in Australia has cautioned its shareholders, against using the Wine Australia export figures as a proxy, for the company’s trading performance in an announcement released on ASX on 1 May 2019.
The company declared that its China business is delivering a robust growth and it had made huge sales across the important Chinese New Year’s festive season.
According to Treasury Wine Estates, the Wine Australia export data can be misleading as it does not incorporate the key structural differences in the company’s business model, its success in export shipment profile and TWE’s portfolio. TWE stated that in China, the selected trade export and import data is not directly associated with TWE’s sales performance, after the establishment of the TWE’s Shanghai warehouse.
The company confirms the continuation of positive momentum in Asia along with record depletions delivered for the nine months ending March 2019.
As per the latest export data released by Wine Australia today (1 May 2019), the total value of Australian wine exports rose by 5 per cent to $2.78 billion in the 12 months to March 2019. The value of Australian wine exports to China increased by 7 per cent during the same period to $1.11 billion, while the volume of Australian wine exports to China reduced by 14 per cent to $17.1 million.
The statement released by Treasury Wine Estates of strong China business contradicts the data released by Wine Australia.
Wine Australia’s Chief Executive Andreas Clark is of the view that the volume decline in the China market is particularly in the below $2.50 per litre value segment. This is due to increased supply availability from rivals like Chile and tightened Australian supply in $2.50 per litre value segment.
According to Mr Clark, Wine Australia is outperforming its competitors in the Chinese market, as the Global Trade Atlas figures indicate that Australia had a 29 per cent share of the imported wine market in the year ended February 2019, a rise from 26 per cent a year ago.
The company confirms reported guidance of EBITS growth (growth in earnings before interest, tax and the SGARA agricultural accounting) of approximately 25% for FY19 and 15 to 20 per cent for FY20.
Treasury Wines believes its grape intake for ''luxury'' wines would rise by 10 per cent, as compared to the last year, since its multi-region sourcing strategy for grapes was showing results after an uneven harvest this year.
In February this year, Treasury Wines announced its Interim Results for the half-year period ended 31st December 2018 (1H FY2019). The net profit after tax increased by 17 per cent to $219.2 million, while the net sales revenue rose by 16.4 per cent to $ 1.507 billion as compared to the prior corresponding period.
The company’s shares have climbed 11.83% in the past month with its YTD being 17.17%. The stock of the company last traded at a price of AUD 17.230 (as on 1st May 2019) with around 2,347,255 number of shares traded.
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