Treasury Wine Estates (TWE) has delivered its results for the 2024 financial year, and they appear to back the company’s decision to focus on its luxury brands, with that portfolio driving strong earnings (EBITS) and net sales revenue (NSR).
Including the contribution from TWE’s acquisition of DAOU in the US in the second half of the year, EBITS increased by 12.8 per cent to $658.1, driven by growth in Penfolds and Treasury Americas. Excluding DAOU, EBITS increased by 6.4 per cent.
The Luxury portfolio’s NSR increased 29.6 per cent, which TWE said was driven by outstanding execution and with consumer demand for luxury wine remaining strong in TWE’s key markets.
Overall net profit after tax (NPAT) was down 61.1 per cent to $98.9m, which reflects the $318.1m loss relating, primarily, to the non-cash impairment of goodwill on the commercial brands portfolio. Excluding material items and self-generating and regenerating assets (SGARA) NPAT was up 8.3 per cent.
Speaking about the results, TWE’s Chief Executive Officer, Tim Ford said: “Our fiscal 2024 performance reflects the excellent momentum we continue to build behind our luxury brand portfolios in Penfolds and Treasury Americas, which now represent over 75 per cent of Group EBITS.
“These two outstanding luxury wine platforms have very clear strategic direction and execution priorities, and we have great confidence in both as strong drivers of long-term growth for Treasury Wine Estates.
“In relation to our premium brands, we are focused on improving the performance of this global portfolio to deliver greater value to TWE overall, with implementing key changes to enable the evolution to the new Global Premium division a key focus through F25.”
The results also highlighted TWE actions following the removal of tariffs on Australian wine imports into China, with TWE immediately starting the process of re-establishing the Penfolds Australia COO portfolio in China. This saw strong shipment demand from customers through 4Q24 with, “initial depletions in line with expectations”.
TWE added: “With global demand for the Penfolds Bin and Icon portfolio expected to exceed availability in the near term, TWE has implemented price increases across a number of key Bin and Icon portfolio wines, effective from 1 July 2024.
“In addition, the record luxury wine intake from the 2024 Australian vintage will support a significant step-up in availability of Bin and Icon portfolio wine from 2H26, with expansion of sourcing from future vintages a priority to support incremental portfolio availability and growth.”
The TWE business is now spilt into three, Penfolds, Treasury Premium Brands and Treasury Americas, looking at the result of those three businesses, TWE said Penfolds reported a 15.5 per cent increase in EBITS to $421.3m.
TWE said: “The [Penfolds] result was driven by strong top-line growth across all portfolio tiers and price points, with the weighting of Bin and Icon portfolio shipments to 2H24 completed as planned.”
TPB reported a seven per cent decline in EBITS to $76m, while this was driven by reduced premium and commercial portfolio shipments, TWE said: “TPB’s priority Premium brands maintained their positive momentum, with NSR up 4.6 per cent, driven by 19 Crimes, Squealing Pig and Pepperjack.”
Treasury Americas reported a 13.1 per cent increase in EBITS to $230.5m.
The result was “driven by the 2H24 contribution of DAOU and 14.1 per cent NSR growth across Treasury Americas’ other Luxury portfolio brands, supported by increased wine availability, particularly for Stags’ Leap and Frank Family Vineyards.”
Looking ahead, TWE said it predicts FY25 EBITS to be in the range of $780-810m thanks to continued strong top-line luxury portfolio growth in Penfolds and Treasury Americas.