Well they've got both types of wines. Short expiry ones as well. This is the core reason for anti-dumping in the first place.
So the writedown will happen. Will it be just the inventory or also the assets producing those inventory? There is no hint around that.
So the ASIA market contributes to 40% of their EBIT. The other market are okay but not a massive money maker. Margin compression is coming soon. The US market is saturated with French and US wines, so this is extremely hard market to penetrate, and if they did, will come at a significant cost. So profitability goes out the window here again.
I do understand your point about $2b in inventory, but this is negated by $1.4b in debt. Some of this debt is negated by cash. This is what fund managers don't talk about. You take cash, then you struggle with working capital. This inventory is to be sold over many years.
Once the fund managers have sold out. Reality will set in.
Just my opinion.
TWE Price at posting:
$9.43 Sentiment: None Disclosure: Not Held
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