Treasury Wine Estates Ltd reports full-year results: Is it a buy?

What: After a poor performance in 2013, Treasury Wine Estates Ltd (ASX: TWE) returned another loss to shareholders with its 2014 preliminary annual report.

With two separate, competing offers from private equity to buy out the company, this could well be the last annual report Treasury Wine Estates releases to the wider ASX.


  • Revenue rose 3.6% to $1,790.2 million
  • Statutory loss of $100.9 million, down from profit of $47.2m in the previous year
  • Earnings before Interest, Tax, SGARA and material items down 14.6% to $184.6m
  • Total dividend of 13 cents for the year
  • Net Tangible Asset backing of $3.24 per share
  • Cost of sales reduced by 7.3%

So What?

It’s been a tumultuous year for Treasury shareholders with the company suffering from a number of setbacks including the departure of a CEO, poor promotional decisions over the Christmas period, and several legal actions launched against it.

Fortunately for the value of shareholder investments, an initial bid to buy out the company was rejected and Treasury Wine now has two competing bids to acquire the entire company at the higher price of $5.20 a share.

Ultimately I believe that the two bids will seal the fate of Treasury, since it is now far too expensive to buy into in the hope of receiving a reasonable return on your investment, and the takeover offers are likely to deliver more value to shareholders.

Now What?

Unless the bids fall through for some reason, there is really little else for shareholders to do except collect their $5.20 once the bid is realised – and soon another one of Australia’s big name brands will be headed overseas.

If the bids should fall through for whatever reason, the share price should drop accordingly and investors will be able to re-evaluate the company at a later date.

In the mean-time if you’re dead set on owning a wine producer you should look instead to Australian Vintage Limited (ASX: AVG), a small wine producer known generally for better performance than Treasury.

Otherwise check out The Motley Fool’s current top stock pick for a great investment idea– this share performs a whole lot better than Treasury, pays a much larger dividend, and has far better growth prospects to boot.

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Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned.

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