Treasury Wine Estates Michael Clarke to leave by 1 July

Treasury’s announcement of Michael Clarke’s departure - initially expected much later this year - came with a shock profit warning.

Treasury Wine CEO Michael Clarke. Picture: Stefan Postles

Treasury Wine Estates’ lofty boardroom ambitions to have its high-flying chief executive Michael Clarke serve out one year’s notice — before he steps down to hand the reins to his replacement Tim Ford — have been binned, with the winemaker announcing late Wednesday night he would actually step down from July 1.

Plans to release Treasury Wine’s fully audited and complete half-year results on Thursday morning were also hijacked by events late on Wednesday, with the company issuing its profit result at the same time as it announced Mr Clarke’s earlier than expected departure.

Helping to smooth the way for Mr Clarke’s exit from Treasury Wine, which will see him return to England, the board has also agreed to provide repatriation support to him up to a maximum of $50,000, as well as allowing him to qualify for long-term incentive plan and short-term incentive plan payments. Separately, Treasury Wine has also signalled it will work on terms for Mr Clarke to work as a consultant to the wine group.

It was only in October that Treasury Wine announced Mr Clarke intended to retire from Treasury Wine after serving as chief executive for nearly six years. But the plan had been that he would not leave, and hand over to Mr Ford, until the first quarter of fiscal 2021 – giving the company one year’s notice.

It was not clear on Wednesday night what had changed to move up Mr Clarke’s departure, other than a brief explanation from Treasury Wine that by leaving on July 1 it would give Mr Ford a complete full financial year to get his hands on the company. Mr Ford’s total fixed annual remuneration is $1.5m a year. This will next be reviewed in September 2021, the company said.

It will certainly come as a shock to investors and analysts who had been told Mr Clarke would stay on longer to help with the handover, as Treasury Wine also conducts a strategic review of its businesses following a shock profit warning issued two weeks ago.

Meanwhile, as part of the surprise release of Treasury Wine’s December-half results late on Wednesday night, the company, which is heavily exposed to Asia and is the biggest selling winemaker in China, said it was too early to tell what impact coronavirus would have on earnings.

“Treasury Wine’s primary focus is the safety and wellbeing of its people, all of whom are well, in good spirits and currently working from home pending their planned return to the office later in February,” the company’s statement said.

“While at this stage it is too early to assess financial impacts, should there be a sustained material impact on consumption, this would impact fiscal 2020 earnings.

“Treasury Wine notes that Asia is a predominantly luxury wine sales region, and that it has the flexibility to allocate luxury wines to later fiscal periods and other geographies in order to deliver sustainable earnings growth.”

It comes after Treasury Wine shares plummeted two weeks ago when it shocked the market with an earnings downgrade caused partly by poor trading conditions in the US, consumer shifts to cheaper private label wine and executive upheavals – mostly surprise departures – at its US business.

Treasury Wine’s share price plummeted almost 20 per cent after the profit warning as Mr Clarke said the company expected to deliver earnings growth of 5 per cent, instead of a previously forecast 15-20 per cent range.

Mr Clarke said at the time the company was undertaking a strategic review, but he ruled out any prospect of demerging poor performing Treasury Wine business.

The financial results released on Wednesday night show Treasury Wine posted a 2 per cent rise in half-year revenue to $1.536bn as net profit lifted 5.1 per cent to $229.2m.