“Our first half performance in the Americas region has been a setback and is disappointing, given the high expectations we have for growth in this important market,” Clarke said.
Treasury recorded a 17 per cent fall to $98.3 million in EBITS (earnings before interest, tax and the agricultural accounting standard SGARA) in the Americas region in the December half.
Treasury shares were hammered on the Australian market in response to the profit warning, with the stock down 22.2 per cent to $12.97 shortly after 11.30am. The slump wiped more than $2.6 billion off Treasury’s sharemarket value.
Mr Errington sharply questioned Treasury’s commitment to the US, saying that in the 25 years he has covered the company “I have never seen this business succeed in the United States.”
“Why would you persist with this (US) business that’s done nothing but offset this fantastic asset that you’ve got in Australia, this brilliant strategy that you’ve got leading into growth markets that sets you aside, where you’ve got competitive advantages,” he said. “You’ve never had a competitive advantage in the US, I doubt you ever will.”
Mr Errington’s remarks came after Treasury cut its forecast growth in reported EBITS for the 2019-20 financial year to between 5 and 10 per cent. This is down from its earlier guidance of 15 to 20 per cent growth.
Treasury is the owner of major wine labels including Penfolds and Wolf Blass.
But Mr Clarke expressed confidence in the wine company’s strategy and outlook, despite the “disappointing” first-half US results. He said Treasury had performed very strongly in its other markets including the key growth market of Asia.
In response to Mr Errington’s criticism, Mr Clarke insisted the US was an important market for the winemaker.
Mr Clarke said Treasury was “outgrowing” its competition in the US in the luxury masstige category – mass-market prestige wines above $US10 – “even in a challenging time, and that’s a good sign for us. So we’re getting traction and we’ve done this in the past six months without a full team in place.”