By Andy Young
Treasury Wine Estates’ CEO Michael Clarke has said that the company’s "journey of transformation" and "pursuit of premiumisation" have helped return it to profit.
The Australian wine giant posted a net profit after tax of $77.6 million, which is up $178.5m on the previous year. The results also revealed higher earnings, before interest, tax and other items of $225m, up 22 per cent. The company also reported net sales growth of four per cent and EBITS growth of 16 per cent on a constant currency basis.
Clarke said that he was “delighted” with the results. He added: “Fiscal ’15 was my first full year as Treasury Wine Estates’ chief executive officer. At the start of the year I said that I intended to drive substantial strategic, operational and cultural change within our organisation over the coming 12 month period, in order to reset and therefore improve the quality of our base business.
“Today’s results demonstrate that we have done just that.
“Our reinvigorated and focused approach to brand building saw 11 of our 15 priority brands deliver net sales revenue (NSR) growth over the year, versus just six brands in fiscal ’14. Collectively our priority ’15 brands delivered 13 per cent NSR growth versus just three per cent in fiscal ’14.”
Some of the brand highlights for the year mentioned by Clarke included Penfolds, Beringer and Wolf Blass.
Clarke said: “We’ve been disciplined on costs, having successfully removed more than $40m of overheads from our business, over-delivering on our initial target of $35m. We’ve also identified a further $15m of overhead reductions in fiscal ’16.
“Fiscal ’15 demonstrated TWE’s commitment to delivering strong results on a sustainable business model and I’m pleased to report that our distributor inventory realignment program in the United States is now complete.
“We enter fiscal ’16 with the most exciting pipeline of consumer marketing and innovation campaigns in the company’s history.”
One of the keys to TWE’s result has been its focus on luxury and masstige portfolios versus its commercial brands; this has included having the two sides of the portfolio produced separately.
Clarke also said that he, along with his management team, believed that the “cultural transformation” of the business, particularly in the second half of the year has been “quite profound, shifting to a truly performance-driven culture.”
A big part of that cultural shift has been transforming from an “order taking agricultural company to a brand-led marketing organisation”, Clarke added.
In looking to the future Clarke added: “Our ambition is to become the world’s most celebrated wine company; a company that enriches peoples’ lives with quality wine brands.
“As we execute our strategic roadmap, we are confident that TWE will generate high-teens EBITS margins by fiscal 2020.
“Finally, I, together with my management team and everyone at TWE, look forward to continuing to drive our Company forward in order to deliver consistent, sustainable financial outperformance and value creation for our shareholders.”