Treasury Wine Estates reported net profit after tax of $87.6 million for the first half of FY16, a 39 per cent increase on the previous corresponding period, on a constant currency basis.

Analysts roundly praised the company’s performance, under which EBITS rose 72 per cent to $146.8 million.

In what TWE termed “a flat overall wine market”, Australia & New Zealand (ANZ) reported EBITS growth of six per cent to $46.7 million, driven by solid volume growth and favourable portfolio mix.

The Americas region reported a 67 per cent uplift in EBITS to $56.2 million, Europe more than doubled EBITS to $17.2 million, while Asia increased EBITS by $26 million to $46.5 million.

CLSA Head of Consumer Research, David Thomas, congratulated the executive team on “a good set of numbers”, while Credit Suisse’s Larry Gandler said it was a “great result”.

“It’s a pretty impressive presentation, I’ve got to say, from all the team,” chipped in Merrill Lynch’s David Errington.

CEO Michael Clarke said the company was reaping the benefits of kicking off FY16 “with the strongest line-up of brand and consumer-led innovation and marketing campaigns”.

“This, together with significantly improved global execution, underpinned an acceleration of our Priority Brand portfolio performance globally in the first half; delivering Net Sales Revenue (NSR) growth of 15 per cent,” he said.

Regional ‘gems’ to drive price improvement
The new strategy announced this week identifying nine brands as regional ‘gems’ will help the ANZ division improve its Net Sales Revenue per case, TWE ANZ Managing Director Angus McPherson told analysts.

NSR per case was $76.37 in ANZ, a one per cent increase on the previous corresponding period.

McPherson said the gem brands typically command price points of $20 and beyond and their intake will be increased this year.

“The regional gems will be given the freedom to innovate and independence to grow with a dedicated in-house team, which is exclusively focused on winemaking, sales performance and marketing of these great brands,” he said.

“We are confident that this new way of managing smaller but very valuable brands will drive margin accretion.”

McPherson said consumer uptake of the July 2015 wine fridge promotion, broadened to include Wynns and Wolf Blass products as well as Penfolds, had been “outstanding”.

“More consumers are now building wine cellars across Australia with TWE’s great portfolio of luxury wines,” he said.