Treasury Wine Estates (TWE) has delivered its FY22 results with total earnings up three per cent to $523.7m and net profit after tax up 5.3 per cent to $263.2m.
Overall net sales revenue (NSR) declined 3.6 per cent to $2.48bn, which TWE said reflected reduced global commercial portfolio volumes and the decline in shipments to mainland China. This decline was offset by strong growth in Treasury’s premium and luxury portfolios. While overall NSR was down, NSR per case improved 16.1 per cent thanks to that portfolio premiumisation.
TWE’s Chief Executive Officer Tim Ford said: “Relentless execution of our FY22 priorities resulted in strong operating and financial performance in each of our brand portfolio divisions. Pleasingly, we have returned to delivering margin accretive earnings growth in a year where we managed through the effective closure of the Mainland China market, materially reshaped our Treasury Americas division and navigated a global macroeconomic backdrop that included the global pandemic, significant supply chain disruptions and inflationary cost pressures.
“The results we have announced today reflect the fundamental strengths of our diversified global business, the flexibility of our operating model and the outstanding execution capability of our teams.”
The diversified business model saw TWE establish Penfolds as a business division, as well as Treasury Americas and Treasury Premium Brands.
While there are still challenges for Penfolds as a result of the tariffs imposed by the Chinese Government, the business is adapting to other markets and new growth opportunities.
TWE reported: “Penfolds reported an eight per cent decline in EBITS to $319.3m and an EBITS margin of 44.5 per cent (up 0.6ppts). The significant decline in shipments to Mainland China was partly offset by continued strength in a number of global markets and channels. Penfolds continues to attract new consumers and grow distribution and availability, globally, with NSR and EBITS outside of Mainland China increasing by 45 per cent and 25 per cent respectively on a constant currency basis.
“In Asian markets outside of Mainland China NSR grew 106 per cent, supported by strong depletion trends in multiple markets led by consumer demand and channel penetration.”
Treasury Americas reported a 21 per cent increase in EBITS to $185.6m and an EBITS margin of 19.3 per cent (up 2.9ppts).
Treasury Premium Brands reported a 27 per cent increase in EBITS to $79.6m and an EBITS margin of 10.0 per cent (up 2.5ppts).
TWE said: “Portfolio premiumisation continued, with strong performance by priority brands including 19 Crimes, Pepperjack, Squealing Pig and Wynns. Significant distribution gains and NSR growth for priority brands in key EMEA and Asia markets was an execution highlight, as was continued innovation success across the portfolio.”
Ford added: After two years of significant change, we enter F23 with momentum, focused on our objectives of delivering quality earnings growth, efficient capital utilisation and sustainable shareholder returns.
“Our recent track record of successfully adapting our business to deliver growth, despite a number of challenges, gives me great confidence in the fundamental strengths of our business and our capability to navigate future challenges and uncertainty.”