Treasury Wines sales have taken off but its profits are still behind

The new 2010 vintage of Grange costs $785. Photo: Simon Thomsen

Treasury Wines has lifted its sales 6.2% to $882.7 million for the first half but its profits are waiting to feel the impact of the company’s rejuvenation.

Net profit for the company was down almost 60% to $42.6 million.

Treasury Wines, which has more than 80 brands including Penfolds, is transitioning from an order-taking agricultural company to a brand-led marketing organisation.

The business is being shifted to more high end wines 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.

Among the changes at Treasury is to move the flagship Penfolds vintage release dates from March and May to a single date in October.

Treasury says this has been an outstanding success.

The 2015 release was launched in New York with Penfolds winemakers and ambassadors attending events around the world to showcase the brand.

CEO Michael Clarke said: “Not only have these initiatives been some of the most successful campaigns in the brand’s history, with the wine cabinet promotion now being launched in several countries around the world, they demonstrate a renewed confidence and commitment within our business to execute campaigns of this magnitude, supported by a significant step-up in consumer marketing investment”.

Treasury is on track to reduce overheads by $35 million this financial year.

In Australia, earnings growth was 84.5% to $43.9 million for the six months. In the Americas, earnings grew to $35.8 million, a 39.8% rise. This was offset partly by marketing expenses.

“I am confident that the steps taken to start fixing the quality of our base business and momentum achieved in the first half of fiscal 2015 will continue in the second half,” Clarke said.

The board announced an unfranked dividend of six cents.