Treasury Wine Estates CEO Tim Ford says the priorities for FY24 are “crystal clear” with maximising the continued consumer demand for luxury wine top of the list.
At the company’s AGM Ford said he long-term global trend for premiumisation, despite tightening economic conditions, saw the Luxury wine category go from “strength to strength” in its key markets.
While FY23 net sales revenue declined two per cent to $2.4 billion, Luxury sales growth and price increases offset Commercial portfolio declines.
Revenue per case increased 13 per cent with 85 per cent of global revenue generated from Premium and Luxury wines.
Ford said that FY23’s cash conversion excluding investment in Premium and Luxury non-current inventory was 76 per cent, below its 90 per cent annual target, but was expected to be back in line in FY24.
Ford said the company’s $10 million in planned capital investment in the NoLo alcohol segment reflected its belief in the market segment. One of its launches was Pepperjack Mid-strength.
Mergers and acquisitions would also be explored if they enhanced its luxury brand and asset portfolio and addressed gaps in the portfolio.
FY24 Group EBITS is expected to be second half weighted because of its phasing of Penfolds shipments, particularly for the Icon and Bin portfolio, across the year to retain flexibility in distribution and pricing models.
“Pleasingly, first quarter trading conditions were consistent with our overall expectations, and we expect continued strong demand for Luxury wine and resilient category dynamics for Premium wine, globally.
“As a result, we remain well positioned to deliver growth in line with our long-term ambition, and EBITS margin expansion towards the 25 per cent plus Group target.
“This growth will be supported by the strength of our global brand portfolio, our diversified business model and the benefits of key asset base and cost optimisation initiatives delivered in FY23,” Ford said.
He also acknowledged outgoing chair, Paul Rayner, who was in the role for 12 years.
“Paul has successfully guided the organisation through a period of significant growth and expansion, as well as navigating the significant challenges that our business has overcome in recent times.
“From my perspective, Paul’s experience and strength of leadership has been invaluable and has made the company what it is today, and I know will have a lasting impact for years to come,” he said.
The new chair is John Mullen.
