By Poonam Behura
(Reuters) – Shares of Treasury Wine Estates scaled a three-month high on Thursday after the company’s core profit met expectations, with focus shifting to an upcoming Chinese review of tariffs on Australian winemakers.
Shares of the world’s largest self-distributing wine company were up 5% at A$11.63, their highest levels since Nov. 8.
Treasury Wine’s earnings before interest and taxes (EBITS) for first-half period ended Dec. 31 came in at A$289.8 million ($188.25 million), in line with Visible Alpha’s consensus estimate.
Weakness in U.S. sales and lower demand for premium and luxury brands led to a 13% fall in profit to A$166.7 million, but beat Jefferies’s estimate of A$123 million.
“Now that we are through the result, which some feared could have been worse than what was reported at a headline EBITS level, we expect investor attention to shift to March 2024 when a decision is expected to be made on China wine tariffs,” Citi analysts said in a note.
Asia’s largest economy imposed punishing tariffs on wine imports in late 2020 as part of an escalating trade dispute with the Australian government.
Melbourne-based Treasury said it was prepared and well-placed to re-establish its Australian country of origin portfolio in China.
The firm now expects stronger results in the second half and reiterated forecast for mid- to high-single-digit organic EBITS growth in 2024.
Treasury Wines declared an interim dividend of 17 Australian cents per share, in line with consensus view, but below 18 Australian cents last year. ($1 = 1.5394 Australian dollars)
(Reporting by Poonam Behura and Aaditya Govind Rao in Bengaluru; Editing by Tasim Zahid and Sherry Jacob-Phillips)
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