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Treasury Wine Estates’ profits more than double
Treasury Wine Estates’ full-year net profits have more than doubled compared to last year, with its business said to be accelerating in all regions, according to its full year 2016 results.
Treasury’s net profits reached AU$179.5m for the 12 months to June 30, compared with AU$77.6m in the same period a year earlier – an increase of 131%.
Shares in the Australian winemaker, which owns Australian brands include Penfolds, Wolf Blass, Lindeman’s and Rosemount, have risen by 10% off the back of a strong set of results.
Total net profits after tax reached AU$179.5m for the 12 months to June 30, compared with $77.6m in the same period a year earlier, representing a 131% increase.
Earnings before tax (EBITS) in Asia grew by 40% compared with the previous year to AU$102m, with volumes increasing by nearly 40%. This was driven by the company’s continued optimisation of routes-to-market across the region and “increasing consumer demand for imported wine brands”.
In Australia and New Zealand, EBITS grew 4% $92.3m, which TWE said was due to strong growth in its “Priority Brands” and improved pricing on supply constrained wines.
The acquisition helped boost earnings for the second half, particularly in the Americas and Europe, with the company reporting a 42% rise in net profits to AUS$60.6 million in the six months to December 31, up from $42.6 million a year earlier.
“Diageo Wine reported an EBITS margin of 16.5% in 2H16 reflecting a favourable mix impact from withdrawing from unprofitable volume and some benefit from overheads already absorbed by TWE’s base business”, said Treasury. “This was partially offset by significantly elevated brand building investment, notably in the Americas.”
Following the accelerated delivery of benefits from its supply chain optimisation initiative, TWE now expects total supply chain savings to reach at least $100m (up from $80m) by F20.
“In summary, the strong full year result demonstrates continued progress to transition TWE from an agricultural, order-taking company to a brand-led, marketing organisation”, TWE surmised.
“Crucial to this transition is embedding a balanced and sustainable business model across TWE’s brand and regional earnings mix, as well as building further flexibility and diversification into the Company’s supply model.”
“TWE is now marketing and selling its key brands across all four quarters of the year, rather than delivering the majority of its earnings from only a few brands in the final quarter of the fiscal year. As a result, TWE’s earnings will continue to be more evenly spread across the fiscal year.”