Newly appointed chief executive of Treasury Wine Estates, Michael Clarke formally addressed the market this morning regarding the commercial performance of the business.
Clarke, who assumed the position on 20 February 2014, admitted that “there is a lot that needs to be fixed” at TWE, and confirmed that the company needed to address it costs structure in order to improve shareholder value.
This could include cutting jobs and selling poorer performing commercial wine brands across its extensive portfolio which consists of 83 labels from Australia and abroad, SMH reports.
In a statement made to the ASX this morning, Clarke said that although there is an increasing demand for high quality wines globally and that the company ‘has an appetite for growth’, his first priority is to produce a balance sheet that supports such ambitions.
“While there are a number of actions to be taken to improve TWE’s performance, my immediate focus is on running the business. It is, however, already clear to me that TWE must take action to reduce overhead expenditure, reinvesting these savings back into consumer and brand marketing,” said Clarke.
“Stronger, long-term relationships with our major customers and distributors are also required if we are to drive sustainable top line and margin growth over time; and there are structural changes to our brand prioritisation, cost base and infrastructure capacity that need to take place.
“I believe there is considerable shareholder value to be unlocked in TWE and I, together with my team, intend to turn this business around and deliver the long-term, sustainable growth our owners expect.”
Clarke assumed the position of CEO following the exit of David Dearie in September last year.
Under Dearie's leadership, the company wrote-down a $160m hit to before tax earnings after ambitious sales forecasts led to an oversupply of wine in the US.
The move saw the company destroy old stock, and heavily reduce the price of selected wines to maintain quality and cope with a restructure of its distribution system into America.