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Why Treasury Wine (ASX: TWE) shares are declining

The· Treasury Wine Estates Co., Ltd. (ASX: TWE) Stock prices are declining this morning as the company announces semi-annually result.. The company’s stock is currently falling to a price of $ 9.78. As a result, winemakers’ share has fallen 1.21% since it closed last night.

How did the treasury wine work in the first half?

Treasury Wine today released a semi-annual report to ASX. The company announced that China’s net income after tax (NPAT) will decrease by 24% to $ 175.3 million. Conflict It damages the profits of the company. As a result, the company’s earnings per share also fell by 24%.

Well-documented ongoing impact from the global Pandemic In addition, the turmoil in sales in China was a major factor in the decline in profits in the first half of 2009. Earnings before interest and tax (EBIT) was $ 284.1 million. In addition, the company’s cost of goods sold increased by 2.8%. Driven by a favorable portfolio mix shift, reduced volume and increased costs.

Nonetheless, the company continued to implement its COVID-19 recovery plan, which was not all bad news for winemakers. Treasury Wine said previous plans on the agenda are driving strong momentum towards recovery in all regions.

In addition, thanks to careful management, the company maintains a strong balance sheet. Net liabilities decreased from $ 403.7 million to $ 1.030.5 billion in the first half. Total liquidity available remains strong, with approximately $ 1.5 billion at hand at the end of last year.

The company will also pay a full interim dividend of 15 cents per share. It represents the payout ratio of 62% of NPAT. This is in line with the company’s dividend policy.

Management comment

Regarding today’s results announcement, TWE CEO Tim Ford commented:

The results for the first half of 2021 show that despite a period of significant turmoil, progress is being made against the TWE2025 strategy. Our progress is the result of the disciplined implementation of plans we have implemented to manage these disruptions and emphasize the strength of our business models in all regions.

I’m looking forward to

As management has pointed out, the current difficult situation is expected to continue for the rest of 2021.

In China, treasury wines are expected to have very limited portfolio demand. However, as the company continues to engage with its customer and consumer base, it is confident in its plans to relocate its luxury brands away from China.

However, these benefits will not be valid until the end of FY21. 2H21EBIT is expected to be below the EBIT in this report.

The stock price of treasury wine fell 12%, which was a tough year.This is well below the flat all Ordinary index (ASX: XAO) Returned at the same time.

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Motley Fool Contributor Daniel Ewing There are no positions in any of the listed stocks. Motley Fool Australia owns and recommends Treasury Wine Estates Limited. The Motley Fool Disclosure policy.. This article contains only general investment advice (based on AFSL 400691). Approved by Bruce Jackson.

Why Treasury Wine (ASX: TWE) shares are declining

Source link Why Treasury Wine (ASX: TWE) shares are declining

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