Treasury wine improves on premiumisation

Premium and luxury wine manufacturer Treasury Wine Estates has returned to a pattern of improving margins and earnings growth as it emerges from a reorganisation following Australian wine’s sudden exclusion from the China market.

Announcing FY22 results that saw profit rise on a slight fall in sales, TWE CEO Tim Ford said relentless execution of its premiumisation plans had resulted in strong performance in each of its brand portfolio divisions.

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

“The results we have announced today reflect the fundamental strengths of our diversified global businesses.”

The maker of Penfolds wines reported operating profits up 2.6 percent to $523.7 million on sales down 3.6 percent to $2.48 billion.

Profit margin was up 1.3 points to 21.1 percent, while earnings per share were up 5.2 percent.

Penfolds profits were down eight percent, with the significant decline in sales to China partly offset by strength in a number of global markets and channels – operating profit outside China was up 25 percent.

Treasury Americas has been repositioned as a premium wine business, with operating profit up 21 percent led by brands Beringer, Stags’ Leap, Matua and 19 Crimes.

Treasury Premium Brands reported a 27 percent increase in operating profit driven by brands 19 Crimes, Pepperjack, Squealing Pig and Wynns.

TWE has committed to invest $20 million in solar technology to support its ambition of 100 percent renewable electricity by FY24.

Ford said TWE was focused on delivering quality earnings growth, efficient capital utilisation and sustainable shareholder returns.

Picture: Treasury Wine Estates

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