Penfolds drives Treasury Wine revenue
Treasury Wine Estates has recorded a profit decrease of more than 60 per cent, following its announcement early this month that it would sell off several commercial brands including a well-known South Australian label.
Treasury Wine Estates (TWE) reported $98.9 million of net profits after tax in the 2024 financial year, a 61.1 per cent decrease from FY23.
However, its net profit before material items, such as the $354 million impairment related to its divestment, was up 8.3 per cent to $407.5 million.
TWE announced on August 6 it would be recognising a $354 million non-cash impairment charge in its FY24 report, relating primarily to the write down of several of its commercial brands, including South Australia’s Wolf Blass.
TWE’s earnings before interest, tax and material items (EBITS) were up by 12.8 per cent to $658.1 million. TWE attributed the increase to growth in its luxury portfolio, which includes South Australia’s Penfolds.
TWE currently participates in three price segments, being luxury ($30 and up), premium ($10 to $30), and commercial (below $10). It operates three standalone divisions in its global business model, being Treasury Americas, Penfolds, and Treasury Premium Brands (TPB).
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Penfolds recorded $1 billion in net sales revenue (NSR) in FY24, a 22.1 per cent increase, with $421.3 million in earnings before interest and tax.
TWE’s total NSR for the financial year was $2.7 billion, a 13.1 per cent increase.
TWE attributed the increase in its overall NSR to strong top-line growth and the acceleration of momentum in its Asia portfolio following the removal of tariffs with China in March.
The company said a 7 per cent decline in its premium brands’ earnings to $76 million reflected “soft consumption trends in the below $15 (or equivalent) price points”.
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TWE said it intends to create a Global Premium division by July 1 2025, combining its Treasury Premium Brands and Treasury Americas premium brands.
“TWE considers a standalone globally focussed Premium division to be the optimal way to drive value from its Premium portfolio of brands whilst continuing to leverage scale benefits across its global network,” CEO Tim Ford and chairman John Mullen said.
During FY24, TWE acquired the American DAOU Vineyards for an upfront $1.4 billion.
Looking forward, TWE said it expects to deliver EBITS between $780-810 million in FY25, with an annual EBIT growth of around 15 per cent targeted for Penfolds.
“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,” Ford said.
“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.
TWE reported $8.1 billion in total assets at the end of FY24, with net assets of $4.6 billion, a $732 million increase from FY23.
The company declared a final dividend of 19 cents per share, 70 per cent fully franked, with a full-year dividend of 36 cents per share.
At the time of writing, TWE’s share price had gone up by 1.65 per cent since the market opened, to $12.30.
