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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Treasury Wine Estates Limited    TWE   AU000000TWE9

TREASURY WINE ESTATES LIMITED

(TWE)
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End-of-day quote. End-of-day quote Australian Stock Exchange - 01/19
9.35 AUD   +0.75%
2020TREASURY WINE ESTATES : Appendix 3Y - Change of Director's Interest Notice
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2020TREASURY WINE ESTATES : ASX Appendix 3G
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2020TREASURY WINE ESTATES : TWE 2020 Fact Book
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Treasury Wine Estates : Australia's Treasury Wine to divert China wine over tariffs, shares tumble

11/29/2020 | 10:21pm EST

SYDNEY (Reuters) - Australia's Treasury Wine Estates Ltd said on Monday it would divert hundreds of thousands of cases of China-bound wine to other countries to avoid hefty tariffs, battering its shares as it acknowledged its future in its biggest market was unclear.

After Beijing imposed a 169.3% mark-up as part of an industry-wide anti-dumping investigation, the world's largest listed winemaker said it would redirect sales of its prized Penfolds label to the U.S., Europe, elsewhere in Asia and domestically.

The move shows a star of Australian consumer exports to China rewriting its strategy almost overnight as a 5-year-old free trade agreement between the countries - which had eliminated wine tariffs - gives way to strained diplomatic relations.

"We are moving on with a plan ... to build the markets outside of China, and that's what we'll continue to do," said Treasury CEO Tim Ford, who started in the role in July. "A strategy of hope's not a very good strategy."

Some of the wine to be redirected was already in port in Shanghai, Ford added. A quarter of the company's upper-range Penfolds wine would be affected by the about-face, added the company, which makes about a third of its profit in China.

Treasury shares fell as much as 12% in early trade on Monday, against a slightly weaker broader market. The stock is down a third since China announced the anti-dumping investigation in August.

"China ... has been a cornerstone market for TWE in growing sales in its top end wines. And the loss of China as a market is expected to be a setback," said Bank of America analyst David Errington in a client note.

Treasury will most likely divert about 1.5 million cases a year from China to other markets by 2023, and China's earnings contribution to the company would almost halve by then, Errington added.

The shake-up adds to the challenge already facing Treasury in the U.S., where Australian winemakers have struggled for years with a perception low quality, plus competition from Europe, South America and non-wine alcoholic drink categories such as whisky.

Ford, the Treasury CEO, said Chinese demand had helped raise the Penfolds price, but "as we've now built the brand with those price levels around the globe, now the consumers are willing to pay that (and) we are not going to discount price to move volume".

The Australian government said it may appeal the Chinese tariff at the World Trade Organization, and Trade Minister Simon Birmingham predicted a "hellishly tough time for Australia's winemakers" until it was resolved.

A China Daily editorial at the weekend said the tariffs "should not be wrongly interpreted as a sign of a trade war", but that Canberra needed to do more to repair ties with Beijing.

Ford said in a statement that Treasury would cooperate with the China investigation but "we call for strong leadership from governments to find a pathway forward".

(Reporting by Byron Kaye and Kirsty Needham in Sydney and Nikhil Kurian Nainan in Bengaluru; Editing by Diane Craft, Lincoln Feast and Gerry Doyle)

By Byron Kaye


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA CORPORATION -0.73% 32.77 Delayed Quote.8.91%
TREASURY WINE ESTATES LIMITED 0.75% 9.35 End-of-day quote.-0.53%
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Financials
Sales 2021 2 511 M 1 941 M 1 941 M
Net income 2021 249 M 193 M 193 M
Net Debt 2021 1 532 M 1 184 M 1 184 M
P/E ratio 2021 26,8x
Yield 2021 2,54%
Capitalization 6 665 M 5 129 M 5 150 M
EV / Sales 2021 3,26x
EV / Sales 2022 3,31x
Nbr of Employees 3 000
Free-Float 99,5%
Chart TREASURY WINE ESTATES LIMITED
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Technical analysis trends TREASURY WINE ESTATES LIMITED
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TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 10,33 AUD
Last Close Price 9,35 AUD
Spread / Highest target 57,4%
Spread / Average Target 10,5%
Spread / Lowest Target -14,4%
EPS Revisions
Managers and Directors
NameTitle
Tim Ford Chief Executive Officer, Director & MD
Paul Ashley Rayner Chairman
Matthew Young Chief Financial Officer
Warwick Lynton Every-Burns Independent Non-Executive Director
Garry Arthur Hounsell Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
TREASURY WINE ESTATES LIMITED-0.53%5 190
VIÑA CONCHA Y TORO S.A.0.11%1 253
DELEGAT GROUP LIMITED-2.63%1 042
C&C GROUP PLC2.86%986
LAURENT-PERRIER1.33%545
ITALIAN WINE BRANDS S.P.A.10.10%204