Fuyi Group wants to spin off Benfu wine business separately and strengthen its luxury strategy

Fuyi Group wants to spin off Benfu wine business separately and strengthen its luxury strategy
On April 8, the Australian wine listed company Fuyi Group (Treasury Wines, referred to as TWE) released the latest status of the strategic review results and announced that it will separate the “Benfu” wine business and related assets into aA company listed on the Australian Stock Exchange (ASX).Fuyi Group pointed out that in the period of the New Coronary Pneumonia epidemic, its top priority is still the health, safety and well-being of the global team, partners and all family members.The consumption and shipment of products in the third quarter of the Chinese market were severely affected by the epidemic. Retail, wine cellar, and tourism channels in other regions have also been closed at the request of the government. However, Fuyi ‘s supply chain has been overcome but no majorInterrupt.Benfucun’s separate listing may lead Fuyi Group to say that the spin-off of Benfucun’s business was made after a detailed review and evaluation of the existing investment portfolio.The decision is based on an internal operating model that will accelerate the separation of wealthy luxury portfolios from commercial portfolios globally, thereby creating long-term incremental value.Fuyi Group will establish two teams, one focused on promoting the luxury line “Benfu” investment portfolio in multiple countries of origin, such as Ford, France, and the United States; the other team will focus on the accelerated decomposition of the new Fuyi Group(Referred to as “Xinfuyi”) the transformation of the luxury line portfolio, while adjusting and reducing the business portfolio.Michael Clarke, CEO of Fuyi Group, said: “Benfu accounts for about 10% of our business volume, but far exceeds half of our revenue.With the rest of our business indicators, Penfolds has unique resources and differentiated execution priorities.The business spin-off will enhance the ability of New Fortune and Benfu to pursue their own strategic priorities and achieve stronger long-term growth under their respective teams and ownership structures, thereby enabling investors to more appropriately assess the basic value of the brand and its assets.Paul Rayner, Chairman of Fuyi Group, said: “I am excited about the prospects that the spin-off may bring to Fuyi Group and Penfolds.Xinfuyi will continue to be the world’s largest integrated wine platform, with a small purchasing footprint, end markets, and significant opportunities to continue to develop its iconic brand portfolio in all markets.Penfolds is a symbol of Australian wine luxury, with considerable profits and significant growth in Asia and the world.”Fuyi Group said that if this potential spin-off plan is implemented, the shareholders of Fuyi Group will own shares of Penfolds and new Fuyi with the same existing shareholding ratio.”Whether the spin-off plan can be implemented depends on the detailed evaluation of shareholders’ costs and benefits, as well as the approval of the board of directors, shareholders and regulatory agencies.Under the circumstances of market volatility and the global pandemic pneumonia epidemic, the spin-off plan is expected to be completed by the end of 2021.After the initial completion, it is expected that Penfolds and Xinfuyi will become the top 50-100 companies listed on the Australian Stock Exchange respectively.Commercial wine business reorganization or even “Ben Fu” may be divided, but Fuyi Group will launch a national-level luxury line business, continue to implement strategic strategies to reduce the scale of commercial wine business, especially in the United States.Adjustment measures include: adjusting the operating model and organizational structure, reducing fixed costs, promoting cooperation with customers and improving performance; restructuring the Fuyi supply chain and improving sales costs; accelerating the reduction of profit margins of commercial brands; merging, replacing or eliminating first-class brandsAnd production assets.The retained commercial business will include a smaller portfolio of profitable and differentiated brands that will continue to attract consumer trends and preferences in key markets.After these improvements are implemented, Fuyi Group will retain multiple compelling brands at all price points.Tim, Chief Operating Officer of Fuyi Group?Ford (Tim Ford) believes: “These changes will accelerate the separate focus on luxury and commercial portfolios, and translate into orderly implementation to improve the potential return on assets.While ensuring that earnings are not affected by current economic or capital market conditions, the related one-time cost impact is replaced to the lowest, and the interference into business performance is minimized.”Q3 in the Chinese market is severely affected by the epidemic. While announcing the potential spin-off business, Fuyi Group also mentioned the impact of the new coronary pneumonia epidemic on its business in FY 2020.In China, Fuyi and its many partners have resumed work.Although the product consumption and shipments in the third quarter of fiscal 2020 have been significantly affected, Fuyi is currently working closely with partners to ensure that operations will resume during the rest of the fiscal year, and shipments will remain in line with the consumption rateProper calibration.Although consumers are returning to work, social and consumption levels are still at a sluggish level, affecting the recovery of the sales gap in the third quarter.In other regions, Fuyi Group achieved strong retail growth at the end of the third quarter, reflecting consumers ‘household consumption potential during the epidemic prevention and control period and the strong momentum of e-commerce channels.However, during this period, retail sales tended to increase profit margins, and non-e-commerce channels such as retail, wine cellars, and high-profit wine tourism projects were still closed in accordance with local policies.Fuyi Group also said that its supply chain operations continue to play a role in various regions, and there has been no major interruption in the recovery.However, due to the increasingly strict home segregation policies of local governments, some businesses have been or are expected to be affected.Fuyi Group will manage the workload of employees according to the level of business activities, and align the remuneration level with the corresponding level of business activities and future government requirements.Fuyi Group still maintains a flexible and efficient capital structure.As of March 31, 2020, its cash flow (including cash and undrawn debt commitments) was approximately A $ 1.1 billion.Michael Clark said: “This is an unusual and very challenging period when consumer transactions have declined.As it is not yet certain how the transaction will proceed in the short term, Fuyi Group is currently unable to provide detailed figures or timetables.After the epidemic, the value of Penfolds franchise rights and portfolios is very important through the long-term growth potential of companies brought about by the normalization of consumption.”Sauna, Ye Wang Guo Tie Picture Official Website Screenshot Editor Xu Jingjing Proofreading Li Shihui