By Andy Young

Both the Chairman and CEO of Treasury Wine Estates (TWE) have outlined the positive position the company currently sits in and the plans for growth over the next two years.

Speaking at the company’s Annual General Meeting last week, Chairman Paul Rayner and CEO Michael Clarke highlighted the strategies that have worked so far for TWE and their confidence in the future.

“I’m pleased to say that fiscal 2016 was another year of positive transformation for Treasury Wine Estates,” Rayner told the AGM. “Building on the foundations set in fiscal 2015, we continued to increase momentum in our journey to becoming the world’s most celebrated wine company.

“We did not stray from our focus on simplifying our operations, realigning our portfolio and investing in our brands and our people to drive growth – and ultimately delivering value for our shareholders.

“I am thrilled with the accelerated momentum TWE has continued to build throughout F16, which is evident in the strong results achieved by the company. On behalf of the Board, I would like to express my thanks Mike, the Executive Leadership Team, and all TWE employees for their unwavering dedication, creativity and resilience in continuing the positive transformation of the company.”

Clarke added: “Fiscal 16 was a strong year for our company, but our journey of growth, is really just beginning.”

He said that he looks at growth as the next phase for TWE, and that there are three key ways to achieving that.

“Firstly, trust marks are brands that consumers know, love and trust to deliver great consumption experiences,” he told the AGM. “Trust marks are also brands that retailers and distributors trust to deliver margin and cash conversion.

“Secondly, we have four strong regional business models. TWE is the only global wine player with a strong global network. TWE can leverage these regions to drive apparent scarcity – and therefore margin accretion – by allocating wine across regions.

“Finally, market tiers, being the Luxury and Masstige tier and the Commercial tier of wine. Extracting growth and margin accretion from these two tiers is not the same.”

Clarke concluded by saying: “Again fiscal 17 and beyond is about growth. Our high-teens EBITS margin guidance by fiscal 18 (next year) is not a destination. In fact, TWE is on a journey to deliver a group margin that is towards our Asia region EBITS of 30 per cent plus – where we land – between our current margin of 15 per cent and 30 per cent – will be through continued margin accretion and how much Commercial wine TWE maintains in its portfolio.

“In addition to our organic growth, I believe we have the team, the brands, the regional business models, and the balance sheet to drive incremental growth and margin accretion by securing increased access to Luxury and Masstige fruit.

“In summary, TWE has a very bright future and I am confident that we can continue to deliver outstanding results and therefore further value creation for our shareholders.”

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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