been dogged by discussions that it should spin its profitable Penfolds business off as a separate firm. Though Treasury doesn’t break out numbers
Speculation about a spin-off was given a boost last week when Macquarie analyst Greg Dring published a note estimating that Penfolds accounted for as much as 50 per cent of TWE’s pre-tax earnings despite generating only 5 per cent of sales revenue, and that TWE could become a takeover target unless it was demerged. But Dearie denies the company, which does not report earnings for individual brands, is overly reliant on Penfolds, citing the quality-improvement program being rolled out across all its Australian and New Zealand labels, dubbed Project Uplift.
In an interview with The Australian, CEO David Dearle tried to put to rest these discussions, saying “It’s not something we’re considering.” If analysts and investors continue to find something lacking in the company’s results, however, we’re certain it is something they will start considering.
Disclosure: The author holds no position in any stock mentioned
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