Treasury Wine warns of lower profit

Maker of Penfolds flags a dip in earnings after it reduced shipments to the US and faced tough competition locally.

Treasury Wine Estates (TWE) has warned of a fall in first-half and full-year earnings after it increased prices and faced tough competition in Australia while reducing shipments to the United States.

In a statement to the Australian Securities Exchange, TWE said it expects EBITS of $42 million to $46 million in the first half of fiscal 2014, compared to $73.4 million in the prior year on a reported currency basis.

TWE said it does not expect to recover the first-half shortfall and expects challenges to continue, lowering its full-year 2014 EBITS guidance to $190 million to $210 million from the previous range of $230 million to $250 million.

Locally, TWE increased prices on some of its commercial portfolio, participated in less deep promotion initiatives over Christmas and faced significant competitive activity, resulting in higher than forecast volume declines.

During the half year, TWE also continued with its planned realignment of US distributor inventory by reducing shipments.

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