Treasury Wine Estates, on track to save $35 million this year, is targeting more costs as it puts wineries up for sale.
CEO Michael Clarke says a further $15 million in savings have been identified and are expected to be realised in 2016.
The business, which has the brands Penfolds, Rosemount and Wolf Blass, is in the process of shifting to more high end wine sales rather than big volumes. This follows write downs of $160 million in the US business after Treasury was left with huge stocks of cheap wine.
A cost-cutting program is part of the plan to return the group to profitability.
“Not only are the cost reductions funding the 50% uplift in consumer marketing in fiscal 2015, the savings are also supporting actions to improve the quality of TWE’s base earnings, while delivering profit growth for shareholders,” Clarke says.
In the latest changes, the wineries Ryecroft at McLaren Vale, T’Gallant on the Mornington Peninsula and Bailey’s in Victoria will be sold.
The packaging and warehousing at Karadoc near Mildura will be moved to the Wolf Blass facility in the Barossa.
And commercial wine processed at Great Western and Wynn’s Coonawarra facilities will be transferred to the Karadoc site.
In the US, the Asti winery in California will be closed and wine production transferred to other wineries.
The latest results from Treasury show profits are still elusive. For the first half, Treasury net profit was down almost 60% to $42.6 million.
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