Treasury Wine Estates has recorded a solid FY23, largely due to strong Luxury top-line growth from Penfolds, price increases across several brands, and cost savings from the global supply chain optimisation project.
Summary
- EBITS: up 11% to $583.5m
- NSR: down 2.2% to $2,432m
- NSR per case: up 12.7% to $109.7m
- NPAT: down 3.3% to $254.5m
- Earnings per share: down 3.3% to 35.3c
(EBITS: Earnings Before Interest, Tax, SGARA and Material items; NSR: Net Sales Revenue; NPAT: Net Profit After Tax)
TWE CEO Tim Ford said premiumisation is still the dominant trend, with Luxury demand strong across all global markets and Premium wine showing its resilience despite a tightening economic environment.
Premiumisation also led the 12.7 per cent increase in NSR per case; Luxury and Premium contributed 85 per cent to group NSR, up from 83 per cent on prior corresponding period (PCP).
The $76 million in post-tax material loss was mainly due to implementing the new Treasury Premium Brands operating model and restructuring the Australia Commercial wine supply chain.
CEO Tim Ford said that while commercial price point volumes remain in a global decline, TWE had been proactive in adapting its operating model and ensuring its cost and asset base were in “the right shape”.
“Our confidence in our future trajectory is underpinned by our diversified global business model, our brands, our markets, our channels, and the multiple country of origin portfolios, which has proven to be a significant strength enabling us to adapt and respond to the ever-changing consumer and economic environment over the past year in particular,” Ford told investors.
Looking at the three brand portfolio divisions - Penfolds, Treasury Americas, Treasury Premium Brands, Penfolds was a standout with strong double digit top line growth.
Penfolds EBITS rose 14.2 per cent to $364.7 million and an EBITS margin of 44.5 per cent. It recorded 14.3 per cent NSR growth across Asia, Australia, and EMEA and the expansion of its multi-country-of-origin (COO) portfolio.
Ford said, “The Penfolds result was the standout, with strong top-line Luxury growth reflecting the unparalleled strength of this exceptional brand and outstanding execution by the team.”
For Treasury Americas, Ford said there was continued build of its luxury portfolio platform, price rises across a number of brands, and growing distribution in a year of constrained wine availability. Its EBITS was up 14 per cent to $203.9 million. Luxury brands Frank Family Vineyards and Beaulieu Vineyard had strong performances but there were shipment declines for 19 Crimes and Sterling Vineyards. The Luxury portfolio was also constrained due to a lower yielding 2020 Californian vintage.
“Treasury Americas Luxury portfolio execution was a highlight, with price increases and growth in distribution achieved despite significant volume availability constraints, setting a strong platform for future growth,” Ford said.
Treasury Premium Brands had a 5.4 per cent decline in EBITS to $87.1 million. While there was a 7.8 per cent growth in priority Premium brands (19 Crimes, Squealing Pig, Pepperjack), reduced NSR for the Commercial portfolio in the UK and Australia and unfavourable foreign exchange movements took away the shine.
“Treasury Premium Brands made significant headway towards its new operating model, right sizing the cost base for the future while enhancing both operational and strategic flexibility, and we will continue to assess additional optimisation initiatives,” he said.
The board declared a final dividend of 17 cents per share, bringing the full year dividend to 35 cents per share, which is a payout ratio of 67 per cent for the full year, which once again is towards the upper end of our target range and an increase on 13 per cent on the prior year.
It was also announced that chair Paul Rayner will step down in October, after holding the position since 2012. John Mullen is the new chair.
