Treasury Wine Estates finds its way back on the road to growth

Treasury Wine Estates has announced an increase in net profit after tax of 5.3 per cent to $263.2 million for FY22. Revenues slipped by 5.7 per cent to $2.53b which the business attributed to the divestment of US commercial brands, the loss of business in China and a falling off of sales in the United Kingdom and Australia as pandemic restrictions fell away and mobility improved.

Earnings before tax lifted 3 per cent to $523.7 million and the portfolio of premium and luxury brands from the TWE stable now accounts for 83 per cent of the business’ revenue, up 6 percentage points, with its global strategy to "become one of the world's most admired wine brands" now well in play.

This is the first year the business has announced its financial results according to its new operating model of three pillars: Penfolds, Treasury Americas and Treasury Premium Brands.

CEO Tim Ford said, “We have returned to delivering margin accretive earnings growth in a year where we managed through the effective closue of the Mainland China market, materially reshaped our Treasury Americas’ division and navigated a global macroeconomic backdrop that included the global pandemic, supply chain disruptions and inflationary cost pressures.

“The results we have announced today reflect the fundamental strengths of our diversified global business, the flexibility of our operating modeal and the outstanding execution capability of our teams.”

The business continues to make gains in Asian markets outside of China. Net sales in Asia (exc China) grew by 45 per cent and TWE remains entirely committed to the region as an opportunity for growth as it seeks to capitalise of the opportunity to widen distribution, particularly in Thailand and Hong Kong.

TWE says it has an optimistic and aggressive strategy for Penfolds in Hong Kong and Thailand as well as for America.

Treasury Americas reported a 21 per cent increase in EBITS to 185.6m while volume decreased by 30 per cent and net sales revenue (NSR) decreased 0.1 per cent.

Targeted price increases have been implemented on the brands TWE believes have “the brand strength to wear that growth,” said CFO Matt Young, and these include Stag’s, Frank’s, Penfolds and 19 Crimes. Expectations are that prices will continue to increase in FY23.

19 Crimes Martha’s Chard is on track to be the number one wine innovation of 2022, said Managing Director of Treasury Americas, Ben Dollard.

Mr Ford said that to date there has been no indication of a change in consumer behaviour to date and that after two years of slight growth, TWE has genuine momentum behind it and is set with a “laser focus on delivering on our plans for growth”.

The first country of origin Penfolds China wine will release in the coming months and today was also an opportunity to announce that TWE has expanded its presence in Bordeaux, doubling its footprint as it acquires a majority interest in Chateau Lanessan, an estate covering more than 350 hectares, including 85 hectares of vines. It has been bought from the Boutellier family who have owned it for eight generations and is one the oldest estates in Bordeaux. 

Shareholders will be paid a 16¢ per share final dividend, up from 13¢ last year.