Treasury Wines tank on share market

TREASURY Wine Estates has been hammered on the stock market, with its share price falling more than 16 per cent after the company flagged a profit downgrade from weaker sales in Australia and China.

The troubled wine giant has cuts its full year earnings forecast from between $230 million and $250 million to between $190 million and $210 million for the 2013/14 financial year.

It expects first half earnings, which will be announced in February, to be between $41 million and $46 million, down from $73 million last year.

In early trade on Thursday, Treasury shares had fallen 16.48 per cent, or 75 cents, to $3.80 by 1030 AEDT, marking the weakest price since February 2012.

The company said weaker-than-expected sales in Australia, following its decision to lift prices on some products and focus less on Christmas promotions, had contributed to the profit downgrade.

Meanwhile, a decline in Chinese demand for premium wine had also hit sales volumes.

Treasury also said it had continued to reduce shipments to the US while increasing investment across the group, especially in Asia.

The profit downgrade is the latest in a string of bad news for Treasury, which last year poured more than $35 million worth of excess or aged commercial stock down the drain in the US.

On that day in July 2013, Treasury shares dropped 71 cents, or 12.2 per cent, to $5.11.

The controversial move, which was part of a broader $160 million writedown, ultimately led to the departure of chief executive David Dearie.

Treasury, which owns the Penfolds and Wolf Blass brands among others, is Australia's largest wine producer.

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