Treasury Wine Estates Ltd., the winemaker fielding separate A$3.4 billion ($3.2 billion) takeover offers from U.S. buyout firms, posted its first full-year loss since listing in 2011 as it sold fewer bottles.
Net losses in the 12 months that ended June 30 were A$101 million, the world’s second-largest listed winemaker said in a regulatory statement today. Second-half sales volumes in its local Australian unit fell 15 percent from a year earlier to about 42 million bottles.
The loss raises the stakes for Chief Executive Officer Mike Clarke, who has pledged to revitalize the sales and marketing operations of the Melbourne-based maker of Penfolds Grange and is allowing an unnamed private equity firm and another venture of KKR & Co. and Rhone Capital LLC to study its books. The undisclosed bidder is TPG Capital, a person familiar with the matter said Aug. 11.
The stock has closed at or below the A$5.20-a-share indicative, non-binding bid prices on eight of the 14 trading days since KKR raised its initial offer Aug. 4.
“It’s a bit of a mess,” Daniel Mueller, an analyst at Morningstar Inc. in Sydney, said by phone. “This company is almost in a perpetual state of reorganizing, restructuring and impairing assets.”
Treasury today posted A$281 million of writedowns and money set aside for restructuring, more than the A$260 million it forecast June 25.
Treasury fell 2.4 percent to close at the bidders’ A$5.20 offer price in Sydney, the sharpest drop in a week.
“I would hope that there’s upside from here,” Clarke said on an investor call after the results. “The two private equity firms have said they love the road map and would like to back management,” he added later in a phone interview.
Sales volumes fell in all of Treasury’s markets over the 12 months and totaled 30 million nine-liter cases, or 360 million bottles. That meant costs rose by A$2.32 a case.
Earnings before interest, tax, one-time items and adjustments for the value of Treasury’s vineyards and wine were A$185 million during the period, below a range of A$190 million to A$210 million forecast in January. It would have been A$193 million except for adverse currency movements, the company said.
In Australia and New Zealand, the company’s largest market by profit, the same earnings measure fell 32 percent to A$75 million. They dropped 13 percent in Asia, where gifts of expensive wines have been hit by a Chinese government anti-corruption drive. They gained 12 percent in the Americas and 82 percent in Africa, Europe and the Middle East.
The company had been looking at acquisition options before the takeover approaches, Clarke said, and set them aside to save management time.
“There’s an opportunity to accelerate the growth in North America,” especially in premium and higher mid-range wines, he said in the interview.
“It would be quite clever to do some bolt-on acquisitions” to gain access to more wine supply, he said, adding that the company could also buy more wine directly from growers if needed.