Slide 15 of 18
Notes:
- Looking beyond 2004, we don’t see the dynamics of our market changing rapidly. There will continue to be an oversupply of grapes, a lot of smart and aggressive competitors, and a need to be tough and efficient. We believe we’re ready, but we also know our financial performance will reflect the realities of our market.
- Of course, we look at and carefully manage every element of our financial performance, but the two primary metrics we focus on in our P&L and balance sheet are EBIT and return on capital.
- EBIT, of course, is a non-GAAP measure, but we track it carefully because it includes equity income from our joint ventures – the brands we have built with the Frescobaldis, Rothschilds and our international portfolio wines like Ornellaia and Masseto – and is a clear indicator of our overall operating progress. Today our EBIT margin is at about 15% and we intend to increase that to 22%
- Our return on invested capital is now just under 5%. The improvements to our balance sheet, coupled with stronger sales and greater efficiency, should move this steadily toward somewhere between 9 and 12%.
