TWE bullish despite tough first-half
Treasury Wine Estates (TWE) is looking at the long-term picture and its 2025 strategy after reporting a fall in net profit after tax and EBITS in its first-half of FY2021.
NPAT was down 24 per cent to $175.3m, while EBOTS was down 23 per cent to $284.1m. The company said that on-going impacts from global pandemic disruptions to its sales channels for higher margin luxury wine across key regional markets, as well as reduced shipments in China resulting from the MOFCOM investigations into imports of wine by Australian producers, were key drivers of lower EBITS in the half.
However TWE CEO Tim Ford said the company was making progress with its long-term ‘2025 strategy’ and that he was confident about the future.
“Our first half fiscal 2021 results demonstrate that we are making progress against our TWE 2025 strategy, despite a period of significant disruption,” Ford said.
“Our progress is the result of disciplined execution of the plans we put in place to manage through these disruptions and highlight the strength of our business models in all regions.
“I would like to thank our team who have done a great job in delivering these results, and I am incredibly proud of the agility and resilience we have shown during this period. I remain confident that this team has the ability to grow our business in existing and new markets, just as it has done in the past.”
Across its key markets TWE reported a 28 per cent decline in EBITS to $127.2m in China, while Americas reported a 15 per cent decline to $83.1m. In Europe and Africa EBITS declined 22 per cent to $25m.
Australia and New Zealand reported a 12 per cent decline in EBITS to $75.3m, which TWE said reflected the ongoing impact of restrictions on people movement to key sales channels for higher margin luxury wine. In retail and e-commerce, TWE’s portfolio of well-known and trusted focus brands continues to perform strongly.
ANZ Managing Director, Peter Nielsen, said: “The ANZ business delivered a strong first-half performance, driven by growth in our key luxury and masstige brands and the retail and ecommerce channels.
“While we did see gradual reopening of on premise venues throughout the period, key sales channels including cellar doors and travel retail remain impacted by restrictions on people movements.
“Our decision to focus our efforts on fewer bigger brands is paying off. We have seen increased availability and strong growth across our priority brand portfolio with the brands collectively growing at two-and-a-half times the category in the half lead by 19 Crimes, Pepperjack, Wynns and Squealing Pig.
“Having a consumer-focused, premium brand portfolio is a key component of our game plan, and we are currently executing a step change in our innovation agenda. This is really exciting given the fabulous foundation we have to build from.
“In summary, I’m really proud of our results in the first half. We’ve seen some great achievements across our brand portfolio and with our retail execution.”
Looking ahead TWE said it is becoming increasingly confident around its plans for reallocation of the Penfolds Bins and Icon range from China to other markets.
Ford said: “While we expect disruptions to continue across a number of our sales channels through the remainder of fiscal 2021, we are well placed to further our recovery once conditions improve in key channels for luxury wine.
The fundamentals of our diversified global business remain strong and I am confident they will continue to support our execution into the future. Further, the momentum behind our strategic agenda continues to build, and the changes we have announced today, particularly in relation to our future operating model, are key foundational milestones towards the ongoing delivery of our TWE 2025 strategy.”