(Corrects reason for impairment charge in graf 2 and removes
reference to wine disposal in 2nd bullet point)
* FY loss A$100.9 mln vs A$47.2 mln profit
* Underlying profit A$112.8 mln vs A$123.2 mln analysts'
* Result hit by A$280 mln impairment charge
* KKR & Co and TPG Capital in rival $3.1 bln takeover bids
By Byron Kaye
SYDNEY, Aug 21 Australia's Treasury Wine Estates
Ltd, the world's No. 2 winemaker, swung to its first
annual net loss and missed analysts' forecasts as the takeover
target grappled with massive oversupply in its U.S. arm and
sales fell globally.
Weighed down by an A$280 million ($259.95 million)
impairment charge related largely to reductions in the asset
value of commercial brands, particularly in its U.S. division,
Treasury booked a A$100.9 million net loss for the year to June
30, from a net profit of A$47.2 million the previous year.
Without the one-off charge, net profit for the maker of
Penfolds, Lindemans and Wolf Blass wine fell to A$112.8 million
from A$141.7 million the previous year, below the A$123.2
million average forecast of analysts polled by Thomson Reuters
The result caps a second horror year for the Melbourne-based
Foster's Group spinoff, whose books are being perused by U.S.
private equity giants KKR & Co LP and TPG Capital
Management for rival $3.1 billion takeover bids.
Treasury has been viewed as ripe for a takeover since late
2013 after it warned of problems at its U.S. operations and
diminishing demand from China as the government cracks down on
luxury gifts to officials.
The company shook investor confidence when it announced in
July 2013 that it would destroy $35 million worth of wine and
take a $160 million writedown in the United States, where it
owns several wineries including Beringer. The debacle led to the
departure of former Chief Executive David Dearie.
But until opening its books to KKR and TPG earlier this
month for due diligence, Treasury had been putting its faith in
new CEO Mike Clarke, a food and beverage turnaround specialist
installed on March 31.
On Thursday, Treasury said the destruction of U.S. inventory
was complete and a broad restructure under Clarke was taking
effect. It gave no earnings guidance but said it was "well
positioned to pursue growth opportunities in order to satisfy
growing demand for premium wine globally".
"Having taken the necessary steps in the final quarter of
fiscal 2014 to drive improved performance, including increasing
consumer marketing, reducing (Treasury's) cost base and
addressing structural challenges within the business, I am
confident the company is now positioned for future success,"
Clarke said in a statement.
Treasury missed its own earnings guidance with earnings
before interest, tax and vineyard revaluations falling to
A$184.6 million from A$216.2 million the previous year. In
January, the company said it expected earnings between A$190
million and A$210 million for the year.
The biggest earnings decline was in Australia, down 31.5
percent to A$75.1 million. U.S. earnings fell 7 percent and Asia
earnings dropped 12.3 percent. On a constant currency basis,
global sales fell 5.3 percent to A$1.8 billion.
Treasury's shares, which hit an all-time low of A$3.43 on
Feb. 5, have since gained around 50 percent amid the takeover
speculation. The shares closed at A$5.33 on Wednesday, above the
A$5.20 rival indicative bids of TPG and KKR.
(1 US dollar = 1.0771 Australian dollar)
(Reporting by Byron Kaye; Editing by Lisa Shumaker and Stephen