World’s largest investment manager ups TWE stake

22 January, 2020 by Andy Young

By Andrew Spence, The Lead South Australia

Treasury Wine Estates announced to the ASX recently that BlackRock had increased its stake in the company to 8.32 per cent with shares valued at more than $AU1bn. This followed a buy up of 7.3 million TWE shares by BlackRock in December, taking its stake from 6.21 per cent to 7.22.

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US-based BlackRock is the world’s largest investment manager and manages about $7 trillion for its investors around the globe.

It initially purchased almost 38 million TWE shares – 5.14 per cent of the company – in March 2017 when the share price was a little over $12 before increasing its holdings to 6.21 per cent in April 2019.

TWE’s share price has rallied in recent weeks from $16.13 on January 3 to $17.58 this morning but is still well down on its six-month high of $19.17 on September 20.

The BlackRock investment announcement follows news that it would shift its focus towards sustainability-focused companies in 2020.

In his 2020 letter to CEOs, BlackRock CEO Larry Fink said his firm would make a series of moves to place sustainability at the centre of its sustainability approach.

The bulk of Treasury Wine Estates’ premium Australian brands produce wine in South Australia, which has a global reputation for sustainable viticulture and winemaking practises.

The state of South Australia produces about half of Australia’s wine and 80 per cent of its premium wine, much of which is produced in the Barossa Valley.

TWE announced a $419.5m profit for the financial year to June 2019, up 16 per cent on the previous year.

The company also announced in August it would spend up to $215m at its Wolf Blass Bilyara winery in the Barossa Valley of South Australia over the next 24 months to expand production, processing and storage infrastructure.

The investment is part of TWE’s “premiumisation strategy”, which also includes buying production and vineyard assets in the Bordeaux region of France.

The company’s total revenue rose 15.5 per cent to $2.88bn for the 12 months to June 30 and the lifted its fully franked final dividend by 3 cents to 20 cents.

Australian wine exports for the 12 months to June 2019 increased by 4 per cent in value to $2.86bn over the 12 months, driven by the Chinese exports and a return to growth in the United States.

Exports to China (including Hong Kong and Macau) reached a financial year record, increasing 7 per cent in value to $1.2bn.

TWE’s earnings in Asia jumped 43 per cent to $293.5m for the year.