AUS: Asia boosts Treasury Wine Estates' FY

By | 17 August 2012

  • FY net profits come in at AUD90m (US$93.9m)
  • Net sales fall by 5.6% to AUD1.64m
  • Operating profit (EBIT) increases by 21.8% to AUD186.8m (US$194.8m)
  • Asia volumes rise by 20.6%
Treasury Wine Estates has enjoyed first-half growth in Asia

Treasury Wine Estates has enjoyed first-half growth in Asia

Treasury Wine Estates (TWE) has posted strong full-year sales and profit growth driven by increases in high-margin Asian market.

In its first year since de-merging from the Foster's Group, operating profits (EBIT) rose by 21.8% to AUD186.8m (US$194.8m) in the 12 months to June 30, the Australian wine group announced today (17 August). Net sales climbed by 5.6% to AUD1.64m. 

Net profits for the full-year came in at AUD90m, but TWE did not offer prior year comparisons, due to the demerger situation. 

Total volumes fell by 4.4% to 31.7m 9L cases, largely reflecting the exit from unprofitable volume in the UK, the group said. Excluding the UK, volumes were marginally up.

In the Americas, TWE's largest market, volumes dropped by 1.7%.

However, in Asia, which accounts for just 3.5% of volumes but 20% of EBIT, volumes jumped by 20.6% and EBITS by 40.6%.

TWE said growth was driven by a 45% rise in brand investment and an expanded distribution footprint. China and Hong Kong saw volumes rise by 31%.

“Treasury Wine Estates is making significant progress against the priorities we set last year, and I’m pleased with our fiscal 2012 results,” CEO David Dearie said.

“Constant currency EBITS growth of 40.6% for the Asian region demonstrates its ongoing importance to TWE.”

Dearie said the Wolf Blass brand had performed well in Asia, with 21% volumes growth thanks to new packaging and marketing initiatives. However, the brand slumped in the UK, with volumes down 29%.

Next year will prove difficult for the wine maker, the group's CEO said, and the company expects earnings growth to be below the pace of the past two years.

“We face three key challenges in fiscal 2013,” Dearie said.

“First, we have less premium wines available to meet consumer demand and the quality wines we have crafted are at a higher cost. Secondly, we expect to incur costs from higher IT operating expenses and amortisation as we build our own, fit-for-purpose IT system. Thirdly, in the US we are working with our distributor partners to reduce inventory levels.”

Dearie said he has high hopes for the quality of TWE's 2012 Australian wines after "almost ideal growing conditions".

Shares in TWE closed the day slightly up at AUD4.580

To read the company's official H1 statement, click here.

Expert analysis

Australia Food and Drink Report Q2 2012

Business Monitor International's Australia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Australia's food and drink industry.

Sectors: Company results, Wine

Companies: Treasury Wine Estates, Foster’s

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