Treasury Wine Estates has given an update on the Penfolds demerger and announced that its 2020 financial year earnings will be down 21% due to the impact of COVID-19.
There were regional declines of approximately 14% in Asia, 37% in the Americas, 16% in ANZ and 18% in EMEA.
The winemaker flagged that the potential Penfolds demerger would be completed by the end of calendar year 2021.
TWE is also preparing to sell selected commercial wine brands and assets in the US.
The update comes ahead of the company's FY20 full-year results announcement on August 13, 2020.
For FY20, TWE expects EBITS to be between $530million and $540million, with the COVID-19 pandemic having a significant impact on TWE’s trading performance across all geographies through the second half of FY20.
The winemaker noted that cost management throughout this period has seen reductions in costs of doing business, including no payment of any discretionary employee incentives which relate to FY20 performance outcomes.
Signs of recovery in China
In China, TWE said it continues to see positive signs of both consumption and sales depletion recovery with continued reopening across the country.
TWE’s depletions in April and May were up 1% when compared to the same period a year ago, after experiencing declines in depletions of more than 50% in February and March versus the same period prior year.
TWE has also been performing strongly in e-commerce, with consumers increasingly shifting their buying behaviour to this channel.
While these recent trends are positive, TWE said it remains cautious on the short to medium term outlook, with gatherings and social occasions, which drive consumption of luxury wine, yet to fully recover to previous levels.
Retail channel strong in US
In the Americas, and the US specifically, the retail channel has seen strong value and volume growth across all price points since March (15%+ on a value and volume basis versus the prior year), with continued premiumisation driving 20%+ value and volume growth in luxury and masstige portfolio price points versus the prior year.
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