Australian premium quaffing company Treasury Wine Estates (TWE) is having trouble with its plans to destroy millions on dollars of wine stockpiled in the US.
And apparently to US government shutdown is to blame for the time it’s taking to get rid of the wine mountain the company — which has brands including Penfolds, Wolf Blass, Annies Lane, Ingoldy, Pepperjack, Rosemount, Seppelts, Leo Buring and Wynns — can’t sell.
The sad plan announced in July this year was to destroy unsold old and aged stock and replace this with fresh and new wines.
Today the premium wine company listed the destruction process and write downs as a $135.4 million hit.
Interim CEO Warwick Every-Burns told the company’s annual general meeting in Adelaide:
“In terms of destruction of aged and obsolete wines at distributor warehouses, the majority of TWE’s distributors have contracted third party destruction agents and commenced making arrangements; however the US Federal Government shutdown has delayed the process.
“A further update on how we are tracking against the destruction of aged and obsolete wine, the use of additional discounts and rebates to pull through stock and revised US inventory levels will be provided at our first-half results in February.”
The CEO says 2014 financial year earnings forecasts remain in the range of $230 million to $250 million following $209 million in fiscal 2013.
Every-Burns stepped into the CEO role while the company seeks a replacement for David Dearie who was ousted following the announcement of the wine destruction plan.
At the time the chairman said: “Having a new chief executive who understands the American market would be a distinct advantage.”
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