Topping the Barrel

Treasury Wine Estates announced CEO Mike Clarke would retire in 12 months, having joined the company in March 2014. Clarke will return to the UK to spend time with family, although he will remain an adviser to the company for up to a year.


COO Tim Ford has been appointed CEO-elect. Ford joined Treasury Wine in 2011 and became director of global supply role in February 2016, before he added leadership of the Europe, South East Asia, Middle East and Africa business in 2017. He was appointed deputy COO in July 2018 and, following the resignation of Robert Foye, became COO in January 2019.


The announcement of the CEO’s retirement came as a surprise to Ord Minnett. Clarke noted the scrutiny over share divestments for tax purposes in Australia was “ridiculous”, and that share sales for tax purposes did not indicate a lack of faith in the business. We suggest this may have had some influence on his decision to retire. We believe Ford is capable of performing the CEO role, although he is perhaps not as proven as Clarke.


Treasury also reiterated its FY20 earnings before interest, tax and SGARA* growth guidance of 15–20% and a pleasing 1Q20. The company noted depletion growth had occurred in all geographies in FY20 to date, with its advantaged business model allowing it to perform despite geopolitical challenges. Guidance for FY21 is likely to be provided at the 1H20 result, as has occurred in the past.


We maintain our Accumulate recommendation with a $20.00 target price.


* SGARA, or ‘self-generating and regenerating assets’, is a reference to the impact of accounting standard AASB 141 (Agriculture), which requires changes in the net market value of agricultural assets such as crops to be recognised in revenue accounts.