TWE delivers 37 per cent profit growth
Treasury Wine Estate (TWE) has reported and strong first half result with reported net profit after tax up 37 per cent to $187.2m, with growth across all regions.
Australia and New Zealand reported EBITS growth of 28 per cent to $68.2m and and EBITS margin of 20.4 per cent, which the company said was “underpinned by strong customer relationships driving revenue growth, along with favourable COGS movement and a net $4m one-off benefit relating to profit on asset sales”.
The company also reported growth in other key regions with 48 per cent EBITS growth in Asia, 17 per cent EBITS growth in Europe and eight per cent EBITS growth in the Americas.
TWE Chief Executive Officer, Michael Clarke, was understandably delighted with the result, saying: “I am very pleased to report another strong result in [the first half of 2018 financial year]. Performance was delivered sustainably, with all regions contributing to EBITS growth and margin accretion.
“Fixed regions, Asia, Europe and ANZ, are outperforming expectations, and we are now taking some exciting steps to really transform our route-to-market in the United States, and further strengthen the long-term outlook for the Americas region.”
On that route-to-market transformation in the US, Clarke added: “Similar to business model changes we implemented in China, Canada and New Zealand, as well as the change in global Penfolds release date – route-to-market transformation in the US demonstrates the relentless focus we have at TWE to continue improving our regional business models. These important changes will also strengthen our ability to deliver value from any future acquisitions in the region.”
Speaking about the company’s performance in Australia and New Zealand, TWE’s ANZ Managing Director, Angus McPherson said: “In the first half of the year the region saw volume growth of three per cent, a 26 per cent uplift in the EBITS to $68m, on a constant-currency basis, and a 3.6 per cent EBITS margin expansion to 20.4 per cent.
“Relationships with strategic customers remain strong and joint business planning processes are maturing. The strength of these relationships coupled with effective brand building investment behind priority brands, supported portfolio premiumisation and enhanced product realisation across certain luxury brands during the period. During the half we further optimised our route-to-market in New Zealand, transitioning to a distributor model in partnership with Independent Liquor New Zealand.
“I’m pleased to say this transition has been smooth and the new model is supporting EBITS growth.”
He added: “For the full-year we expect ANZ to deliver strong EBITS growth, but like Asia, EBITS is likely to be H1 weighted primarily due to some retaking of some luxury product allocations from H2 to H1 to support increased demand during the festive consumption period.”
Speaking of the year ahead, Clarke added: “I am very excited about the outlook for the Company, and am confident that the business model changes we are making this year, along with an increased availability of high-end wine, will set TWE up for accelerated growth in F19, F20 and beyond.”