TWE records strongest organic growth in its history
Treasury Wine Estates (TWE) has delivered the strongest organic net sales revenue (NSR) growth rate in its history off the back of continued growth in China and a strong performance in Australia, New Zealand.
In delivering its interim 2019 financial result TWE said its NSR was up 16 per cent to $1.5bn, an increase of 13 per cent on a constant currency basis, which Chief Executive Michael Clarke labelled the company’s “largest organic growth rate” in its history.
“Last year, fiscal 18 was the year that we labelled a ‘foundation year’ as we undertook significant steps to enhance our brands, partnerships, people and particularly our business model in the United States. All while delivering a result that exceeded our expectations,” Clarke said at the results announcement.
“Today I am very proud to say that the foundation we have established continues to deliver sustainable momentum and this is demonstrated by yet another strong set of financial results for the group.”
In the half year ended 31 December 2018, TWE achieved its top line growth through “a combination of increased volume, price realisation and continued premiumisation”, according to Clarke.
He added: “Group EBITS increased 19 per cent to $338m, with margin increasing to 22.4 per cent. Statutory net profit after tax was $219m up 17 per cent on a reported currency basis and earnings per share up 19 per cent.”
Asia remains a huge market for TWE with EBITS up 31 per cent to $153m, which was driven by increased availability of luxury and masstige wine, as well as “outstanding sales execution”.
Detailing the company’s performance in the ANZ business, Tim Ford, TWE’s Chief Operating Officer, said: “While net sales revenue was flat across the region, the ANZ business continues to perform exceptionally well, particularly in Australia, driving EBITS of $77m, which is up 16 per cent on the prior period, and EBITS margin of 23.2 per cent, which is increased by 3.2 points.
“There was strong topline growth in Australia, with volumes increasing 3.8 per cent, well ahead of the market and driven by distribution gains across key customers.
“All key brands are performing well with growth driven by the masstige portfolio and the masstige price points.”
He added: “TWE’s launch of canned wines and the spritz-based products this half has also been a huge success. We are now the market leader in canned wine and have the top four products in the market, even though our competitors have been in the market longer than us.”
Looking at the year ahead, Clarke said: “We have established a platform for sustainable success and we believe that our competitively advantaged business model, combined with our increasing allocations of luxury and masstige wine will allow us to continue to grow earnings each year.
“We will continue to optimise our business models going forward, setting us up for further future success, while continuing to grow earnings in a sustainable and disciplined manner.”