TWE Announces Second Phase of Cuts

October 6, 2015
By Alana House
Treasury Wine Estates (TWE) has announced its second phase of cuts to the business this year.

Originally announced at TWE’s 2015 Full Year Results presentation in August, the cuts aim to reduce costs across the business’ supply chain.

Since August, TWE has been busy implementing the first phase of its plans. Now moving into the second phase, the business will begin to make further overhead and asset cuts to vineyards, wineries, logistics, warehousing and freight arrangements.

Phase two is expected to deliver an annualised Cost of Goods Sold (COGS) of approximately $30 million per annum by fiscal 2020, but with a non-cash write down of $20-$30 million in fiscal 2016.

“Today’s announcement demonstrates that we are successfully transitioning TWE from an order taking, agricultural company to a more efficient, brand-led marketing organisation”, Michael Clarke, CEO at TWE said. “Right sizing our production footprint, improving our Return on Capital Employed (ROCE) and optimising our global supply chain network are crucial steps on this journey.”
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