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  • Treasury Wine Estates Swallows $558m Blow in US Market Downsize: Total Write-Downs Top $1.2 Billion

    Treasury Wine Estates Swallows $558m Blow in US Market Downsize: Total Write-Downs Top $1.2 Billion

    Treasury Wine Estates (TWE), the company behind the Penfolds brand, has experienced an additional financial setback of $558.4 million following the scaling back of its operations in the United States. This recent loss brings the total write-downs to over $1.2 billion.

    Operational Changes and Focus on Underperforming Markets

    In June, the company announced to its investors that it intends to significantly downsize its brand portfolio and withdraw from underperforming assets, with a particular focus on its underperforming US market. TWE’s CEO, Sam Fischer, stated that the company is taking decisive steps to align supply with a stringent model of future demand, in light of an evolving US wine market.

    This strategic shift will lead to a reduction in the company’s yearly grape intake, with $137 million of the write-down projected to come from asset divestments. Despite these financial setbacks, the news was accompanied by an anticipated, above-estimate full-year earnings figure of $492 million.

    Future Prospects and Business Performance

    Fischer added that both the company’s ascent transformation program, and the strategic review of potential options for the future of its US business, are making good progress. He emphasized the continued positive momentum in the business, with key brands such as Penfolds, Daou, and Frank Family Vineyards outperforming their respective categories. Fischer also expressed confidence that the full-year earnings would surpass the guidance shared earlier in June.

    In TWE’s half-year financial report, the company disclosed a close to $650 million loss, with a dip in sales reported across all markets. Despite this, the company maintains optimism that it will rebound and achieve growth by the 2028 fiscal year.

    Questions & Answers

    What is the total amount of Treasury Wine Estates’ recent financial setback?
    The company has taken an additional $558.4 million hit, bringing total write-downs to over $1.2 billion.

    What strategic changes is Treasury Wine Estates making in response to its underperformance?
    The company plans to significantly reduce its brand portfolio and withdraw from underperforming assets. It will also align supply with a stringent model of future demand, focusing on the evolving US wine market.

    How does Treasury Wine Estates perceive its future prospects?
    Despite current financial setbacks, the company expressed optimism about its future. It expects key brands like Penfolds, Daou, and Frank Family Vineyards to continue outperforming, and aims to achieve growth by the 2028 fiscal year.

  • Total Investment Partners with Alibaba to Drive its Digital Transformation

    Total Investment Partners with Alibaba to Drive its Digital Transformation

    Total (China) Investment has signed a Memorandum of Understanding (MoU) in order to pursue strategic collaboration with Alibaba Group (“Alibaba”) (NYSE: BABA; SEHK: 9988) and leverage their respective resources to drive the digital transformation of the Company’s operations in China.

    Under the MoU, the two companies will develop in-depth collaboration based on the Alibaba Business Operating System (ABOS). Total (China) Investment will utilize Alibaba’s leading digital capabilities and technology across e-commerce, online payments, local services, supply chain, big data, and organizational management. The partnership will provide digital infrastructure and support for TOTAL’s service stations, lubricants and special fluids businesses in China, helping the company to enhance the accessibility and flexibility of its product offerings and services, accelerate its branded retail and outlet footprint and drive sustainable growth opportunities.

    Total has been present in China for almost 40 years. This collaboration signifies that Total has become the first international energy company to leverage Alibaba ABOS, setting a digital transformation benchmark in the energy industry.

    “Digital technology is a critical driver for achieving our excellence objectives across all of Total’s business segments. Total Group’s ambition is to generate as much as $1.5 billion in value per year for the company by 2025 through digital transformation initiatives,” said Ian Lepetit, President of Total (China) Investment. “China has a world-leading environment for digital innovation and a fertile ground for making it a reality. We hope the partnership will not only improve our business in this country but also create a best practice that we can roll out to Total Group’s overseas business, delivering better products, services, and better customer experiences to more than 8 million customers everyday worldwide.”

    “As one of the foremost players in the global energy industry, Total is renowned for an excellent lineup of products and services”, said Jet Jing, Vice President of Alibaba Group. “It is a privilege to work together and leverage the Alibaba Business Operating System to accelerate Total’s digital transformation, particularly in the areas of product innovations, customer acquisition, order fulfillment and organizational development. We believe the ABOS will support Total to establish a data-technology-driven and customer-centric operating system. Thriving on Alibaba’s integrated platforms and customer touchpoints, the ABOS will also facilitate Total to serve more customers, serve each customer to the fullest and provide better customer experience at a lower cost and in a more efficient manner.”

    The partnership will cover Total (China) Investment’s major business activities (including service stations, lubricants business and car care business) and cooperate with more than 10 business units in the Alibaba Digital Economy. Total will have a cross-platform consumer-facing storefront, which will be launched to the market soon. Customers will be able to enjoy a seamless online-to-offline experience for TOTAL’s products and services on various popular apps, such as Taobao, Tmall, Alipay, Eleme and Amap, at anytime and anywhere.

    Total has long been pursuing digital transformation. As part of an effort to efficiently implement its digital strategy, Total has adjusted its enterprise organizational structure, establishing the new role of Chief Digital Officer and appointing digital officers to its business segments.

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  • Total’s Indian Joint-Venture To Seek Fuel Retailing License

    Total’s Indian Joint-Venture To Seek Fuel Retailing License

    A joint-venture by India’s Adani Gas and France’s Total will soon seek government permission to open retail fuel stations in India, Adani’s chief executive said on Wednesday. India has become a lucrative market for global oil majors after the government removed controls on the retail pricing of gasoline and gasoil and relaxed rules for setting up fuel stations in the country, the world’s third-biggest oil consumer and importer. The joint venture, Total Adani Fuels Marketing Pvt Ltd, will soon apply for a license under the new liberal fuel retailing rules, Manglani said.

    “Definitely we will take full benefit of the expertise and strength of Total,” Suresh Manglani told reporters on an earnings call, adding that the intent was to become a full-service operator, providing a multi-fuel offering.

    Fuel demand in India is expected to rise in the coming years as Prime Minister Narendra Modi pushes for Asia’s third-largest economy to grow from $2.9 trillion of gross domestic product in 2019 to $5 trillion by 2025.

    British oil major BP has already teamed up with Reliance Industries in a fuel retailing joint venture, and Shell and Abu Dhabi National Oil Co also both want to strengthen their presence in India.

    Total bought a 37.4% stake in billionaire Gautam Adani-promoted Adani Gas last year to capitalize on India’s push for cleaner sources of energy. Adani Gas, which has so far focused on selling gas to industry and households, also wants to sell liquefied natural gas (LNG) for transportation. Modi wants to raise the share of gas in India’s energy mix to 15% by 2030 from the current 6.2%.

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