Treasury Wine Estates says its walking away from trying to sell its Commercial brands portfolio because the offers received were too low to be considered. At the Premium end of its business, Penfolds delivered an “outstanding result”.
TWE announced in August last year that it would divest its Commercial brands portfolio and register a $290 million non-cash impairment after tax against its Treasury Premium Brands (TPB) division, including Wolf Blass, Yellowglen, and Lindeman’s brands. At the time the brands contributed less than five per cent of the group’s gross profit.
Snapshot
- Net sales revenue (NSR): $1.5b, up 20%;
- NSR per case: $137.5m, up 16%;
- Earnings before interest, tax, SGARA and material items (EBITS): $391.4m, up 35%;
- EBITS margin: 25.3%, up 2.8ppts;
- Net profit after tax: $220.9m, up 32.5%;
The Luxury Portfolio is driving growth for the company, with Penfolds having an “outstanding result” and the integration of DAOU winery and the China market coming back online the main support acts. Luxury NSR was up 51.9 per cent and now represents 55.8 per cent of Group NSR.
Penfolds recorded a 33.9 per cent increase in EBITS to $250m with an EBITS margin of 45 per cent, driving strong Bin & Icon portfolio shipments to Asia.
Meanwhile, Premium Brands reported a 49.9 per cent decrease in EBITS to $22.9 million as the market for cheap wine continues to fall.
Treasury Americas reported a 66.9 per cent in EBITS and a 41 per cent NSR increase, which was driven by the DAOU acquisition
Ford said on an investor call, “Let’s not hide from it, the Premium business is never going to be the growth engine or the margin growth engine that Penfolds or the Luxury business will be, but it plays a pretty important role to ensure that we can continue to invest and drive those businesses for us going forward. So, it’s more than just cost efficiency, it enables us to have the right resource allocation, the right capital structure, but we’re not going to over invest in that side of the business.”
TWE expects FY25 EBITS of approximately $780 million, which is at the lower end of the previously guided range of $780m-810 million, driven primarily by reduced expectations for Treasury Premium Brands.
