* Weak China sales, rising costs cut H1 profit 38 pct
* Food industry executive Michael Clarke appointed CEO
* Company expects tough conditions to continue in H2
(Adds new CEO details, share price movements)
By Byron Kaye
SYDNEY, Feb 20 Australia's Treasury Wine Estates
Ltd confirmed weak sales in China and rising costs cut
its profit by over a third, saying it hired Michael Clarke,
chief executive of British food maker Premier Foods Plc,
to lead a turnaround drive.
The world's second biggest winemaker by sales on Thursday
followed a drastic profit warning it issued in January by
reporting operating earnings for the first half ended Dec 31
skidded 38 percent to A$45.8 million ($41.37 million) from A$73
million a year earlier.
That warning from the maker of Penfolds and Beringer wines
led to a 20 percent slide in the company's shares, stoking
speculation that Treasury could eventually become a takeover
The first-half profit was toward the top of the range
Treasury indicated in January, and Treasury shares were trading
up 2.4 percent at A$3.80 on Thursday. Sydney's benchmark index
The company's problems have mounted in recent months: In
September it sacked CEO David Dearie over poor inventory
controls in the company's United States arm.
Company director Warwick Every-Burns took over from Dearie on a
temporary basis pending the recruitment of a new CEO.
On Thursday the company said first-half sales fell 7.5
percent to 15.26 million cases, and warned that tough trading
conditions would continue in the second half. Interim net profit
rose to A$106.2 million from A$45 million previously, but that
included an A$80.5 million tax benefit.
In a conference call after the earnings were released,
analysts questioned new CEO Clarke's suitability for the job,
saying he has no experience of the wine trade. Clarke has
previously held senior roles at Kraft Foods Group and
The Coca-Cola Co, as well as Premier Foods.
Treasury's Chairman Paul Rayner defended the appointment.
"He's been able to pick up different brands, different
products, different segments of the world, and make those
businesses improve," Rayner said. "We chose him on the basis
that we think he can do that with Treasury."
($1 = 1.1071 Australian dollars)
(Reporting by Byron Kaye; Editing by Jane Wardell and Kenneth