Treasury Wine Estates has recorded a 25 per cent drop in net profit after tax, as new CEO Tim Ford sets out a revised five-year plan.
Snapshot:
- net profit after tax (NPAT) down 25 per cent to $315.8 million;
- net sales revenue (NSR) down six per cent to $2649.5 million;
- earnings per share (EPS) down 26 per cent to 43.0 cents per share;
- F20 earnings before interest, tax, SGARA and material items (EBITS) down 22 per cent to $533.5 million; and
- new five-year plan to find savings and drive increases in margins and growth.
Treasury Wine Estates has had what Ford describes as a unique year with significant disruptions caused by over-supply issues in the US and COVID-19.
Ford had flagged further downgrades in June but said the company has seen positive signs coming out of China and operational improvements following its review of the US business, which had taken a massive hit in the 1HF20 due to over-supply and staffing issues.
Subsequent operational and organisational restructures in the US have been completed and are expected to save the business at least $35 million in F21. It will see TWE volumes in the US halved but with a heavy focus on premium price points.
The possible separation of Penfolds from TWE could be a demerger as originally flagged, but an internal separation is also being considered, Ford said. The company would provide more detail by the 1H F21.
He also outlined TWE2025, a revised five-year strategy. He said there would be change and transformation in a number of key areas, with the need to acknowledge while many things are working well, there are others that need to be done differently.
“The next critical stage is putting the consumer at the heart of everything we do,” he said, commenting on the company’s process of shifting from an agriculturally led to a brand led business.
“Our diverse multi-regional, multi-channel sales model is a key strength and growth in the shift to premiumisation will see more balance in its sales mix, as well as greater D2C and retail ecommerce opportunities. Diversification is at the hear of our strategy,” Ford said.
A restructure of tis global supply chain is expected to deliver annualised COGS benefits of at least $50 million by F23, Ford said.
