Luxury strategy rewards TWE with growth across all pillars

Treasury Wine Estate's luxury strategy has paid off with the business reporting a growth in EBITS of 17.2 per cent at $307.5 million and NPAT of $193.7m, up 18.7 per cent for the first half of FY23.

At its half yearly results presentation, CEO Tim Ford attributed the strong performance to growth of the luxury segment, price point increases which have lifted the EBITS margins by 3.2 per cent to 23.9 per cent and the company's global supply chain optimisation.

All divisions at TWE improved their net sales revenue revenue lifting by 1.4 per cent to $1.3b and with a NSR per case lift of $108.6, up 13.5 per cent. Luxury and premium wines sales contributed to 85 per cent of the global NSR result and a favourable foreign exchange rate helped to support the strong result.

CEO Tim Ford said, “Our luxury wine portfolios in particular continue to perform exceptionally well across all markets and channels, and the fundamentals of the category are expected to remain strong at these higher price points. 

“We consider this set of results to be an important and additional proof point of our teams’ ability to navigate the changing and variable economic, consumer, and market dynamics, whilst maintaining our focus on the delivery of our financial objectives”. 

Ford declared the result a good indicator that the business is on track to achieve its 2025 goal to be 'the world's most admired premium wine company' delivered in its TWE Strategy two and a half years ago.

"We're now at half time of that five year strategy and we are firmly on track to achieve that," he said.

The business is striving to reach a target of EBITS 25 per cent margins.

Luxury brands in the Americas performed well, namely Matua which grew by 30 per cent, Beaulieu Vineyard, 19 Crimes and Frank Family Vineyards. However, commercial brands fell away in the US and in line with the broader global trend. This meant that Treasury Americas and Treasury Premium Brands both experienced volume declines due to the softening commercial market in the UK and US and for entry level Premium wine (retailing at around USD$8.00-$11.00) in the US.

After 12 months of hard work, Penfolds has grown its distribution bases in Asia, Australia and in the EMEA. EBITS for the division of $181.6m show an increase by 11 per cent compared to the 1HFY22 and margins increased by 1.7 per cent to 44.3 per cent. There were increases in volume and NSR increased by 6.8 per cent to $410.2m. NSR per case increased 2.2 per cent, supported by price increases on supply constrained luxury Cabernet Bins.

Penfolds Managing Director, Tom King, said the brand is is performing strongly in Malaysia, Thailand and Vietnam, and after some hard work it has re-affirmed its position in Australia. He also said that Penfolds country of origin Penfolds releases have been a success.

King said, "It has been a dynamic first half for the fiscal year of 2023 and we expect that to continue."

Looking ahead, Ford says the business expects trading conditions to continue along the same trajectory.

TWE will pay shareholders a dividend of 18c per share.