January 30, 2018 / 10:20 PM / 19 days ago

UPDATE 2-Australia's Treasury Wine cheers record half profit on Asia appetite

* Treasury H1 NPAT A$187.2m, up 37 pct

* H1 profit pre tax, significant items A$283m vs A$236m analysts

* Company to bring its China direct distribution model to the US (Recasts, updates CEO quote, adds analyst quote, shares)

By Byron Kaye

SYDNEY, Jan 31 (Reuters) - Australia’s Treasury Wine Estates Ltd on Wednesday posted a record interim profit on soaring China exports and said it would roll out its Asian direct distribution model in the United States, sending its shares to a record high.

The result suggests the owner of the Penfolds, Wolf Blass and Rosemount labels remains determined to crack the U.S. market despite an embarrassing retreat four years ago.

Since joining the world’s largest winemaker in the wake of that episode, CEO Michael Clarke has led Treasury’s A$754 million ($608 million) buyout of Diageo Plc’s U.S. assets. On Wednesday Clarke said Treasury would install its own distributors to tighten control over its sales in up to 15 U.S. states.

“Once we get to bedding down this business in America, I think this business will take off, much like it took off in China,” Clarke said on an analyst call.

Treasury shares rose as much as 2 percent, touching a record intraday peak of A$17.36, triple the value of two takeover offers the company rejected in 2014.

The Melbourne-based company said booming Asia sales helped it grow net profit 37 percent to A$187.2 million and beat analyst estimates in the six months to Dec. 31, while sales volumes in the Americas declined 10 percent due to a plan to sell less cheap product there.

Sales volumes in North Asia meanwhile leapt 60 percent as a new generation of wealthy consumers has taken to drinking wine with daily meals or for fun.

“China’s a very special market in terms of the demand for wine but in the U.S., due to its size and the scale they have over there, they should be able to take advantage of any potential acquisitions and organic growth as well,” said OptionsXPress analyst Ben Le Brun.

Clarke acknowledged that overhauling the company’s U.S. distribution network would be complex and potentially unpopular with retailers, but added it was necessary to improve efficiency and control.

Treasury announced its results two weeks earlier than expected because of a leak in the United States concerning the changes to its distribution network, Clarke added.

The company expected to post pre-tax profit of A$524 million in the full 2018 fiscal year, which would be an increase of 15 percent on the prior year, he added.

Treasury declared an interim dividend of 15 cents per share, up from 13 cents a share a year earlier.

$1 = 1.2401 Australian dollars Reporting by Byron Kaye in Sydney and Chandini Monnappa in Bengaluru; Editing by Stephen Coates

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