Treasury boosts returns as premiumisation takes effect

Treasury Wine Estates the maker of Penfolds has reported rising profits on steady revenues as its programme of premiumisation of its wine offerings and focus on luxury brands takes effect.

The company reported sales revenues relatively steady at $2.4 billion for FY23, down 2.2 percent or 4.4 percent on a constant currency basis on the previous year.

However EBITS operating profit grew by 12.7 percent or 9.6 percent on a constant currency basis to $109.7 million. Net profit after tax was up 16.6 percent to $376.1 million.

The company’s EBITS margin was up 3.0 points to 24.1 percent.

Treasury said the improvements in profitability were driven by strong luxury sales growth from Penfolds, successful price increases across several brands and cost savings from the company’s global supply chain optimisation programme.

The total cost of the supply chain programme will be incurred in FY24 and FY24, with benefits – $90 million in annual savings – exceeding their cash cost and mitigating against rising cost of goods from lower volumes. Commercial wine brand sales have been under pressure in many markets.

TWE Chief Executive Officer Tim Ford said the company delivered accretive earnings growth in a tightening economic environment.

Ford said: “The Penfolds result was the standout with strong top-line luxury growth reflecting the unparalleled strength of this exceptional brand.

“Treasury Premium brands made significant headway towards its new operating model, right sizing the cost base for the future while enhancing both operational and strategic flexibility.”

Premium brands include 19 Crimes, Squealing Pig and Pepperjack.

Penfolds reported a 14.2 percent increase in EBITS to $364.7 million and an EBITS margin of 44.5 percent.

Overall net sales revenue per case (NSR) grew by 14.3 percent in Asia, Australia and emerging markets.

Treasury Americas EBITS was up 14 percent driven by luxury brands Frank Family Vineyards and Beaulieu Vineyard.

Picture: Penfolds