Treasury Wine Estates (TWE) shares have surged by around 10% over the past month to a worth of $12.
The strong stock market performance by Australia's largest wine producer coincides with a recent announcement to the ASX revealing that it is on track to meet profit predictions for the year.
“TWE continues to expect mid-to high single digit EBITS growth in F24, excluding the EBITS contribution from DAOU in 2H24,” read TWE’s latest ASX announcement.
The news also comes at a time where Australian Vintage Limited and Accolade Wines, two of Australia’s other biggest wine producers, have been struggling in the current wine producing climate. This includes Accolade Wines unsuccessfully attempting to exit a long term contract with its Riverland grape growing cooperative and Australian Vintage Limited entering into an ASX trading halt.
At the time of suspending share trading, Australian Vintage Limited requested that the voluntary suspension from share trading continue up until today 11 June, at which point it will release “details of the proposed capital raising to be undertaken by Australian Vintage, comprising a placement (Placement) and accelerated non-renounceable entitlement offer (Entitlement Offer).”
This morning, Australian Vintage requested that “the Suspension continue until the Company makes an announcement to ASX concerning the outcome of the Placement and institutional component of the Entitlement Offer, which the Company anticipates will be made prior to commencement of trading on Thursday, 13 June 2024.”
“The Placement and institutional component of the Entitlement Offer are scheduled to take place over the course of two trading days, with an announcement about the results to be made before the commencement of trading on Thursday.”
Australian Vintage first entered into a trading halt after revealing a net debt of between $70 and $75 million almost double the $43-$50 million previously forecasted. A further $15 million of existing bank capacity is also due to expire over coming few months, reducing Australian Vintage’s bank capacity, including overdraft facilities, to approximately $78 million.
According to its original ASX announcement requesting a suspension in share trading, Australian Vintage “believes that commencing trading would be materially prejudicial to its ability to source additional capital which is critical to support its continued financial viability and operations.”
Earlier this year, Accolade Wines entered into a recapitalisation plan that saw Australian Holdco Limited become equity owners of the group. According to CEO Robert Foye, Accolade’s “ability to respond to these challenges and grow has been hampered by an unsustainable balance sheet.
“There has been a lot of discussion of the issue confronting our industry and we need to move the focus towards action and solutions,” he said.
In contrast to the current positioning of Australian Vintage and Accolade, Treasury Wine Estates has met its objectives across all of its portfolio including Treasury Americas. This includes its “expectations for DAOU [remaining] unchanged,” with anticipated “EBITS of approximately US$24 million, in line with expectations. In total, Treasury Americas’ F24 EBITS are expected to be in the range of $223 to $228 million.
TWE revealed the above date during a recent presentation to US investors at DAOU Vineyards in Paso Robles, California. During this presentation, it also discussed the significant value creation opportunity of leveraging the existing strengths of Treasury Americas and DAOU Vineyards.
Drinks Trade recently caught up with Stephanie Dutton, Penfolds’ Group Winemaker, to discuss Penfolds’ Chinese, French, and US offerings. According to Dutton, “The US portfolio has had really good traction with our US collectors and consumers, and it’s certainly helped amplify the Penfolds brand in the market.
“I think what is really interesting for high-evolved wine collectors now in the US is that you have an Australian portfolio that they were acquainted with, a US portfolio now from the same brand that they’re probably a little bit more familiar with geography-wise, and they’re now swapping between the two and sharing information and it’s building the brand over there, so, from a winemaking point of view and with our high-end collectors and loyalists, it’s been fantastic.”
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