Treasury Wine Estates has announced its 2021 financial results, which saw EBITS increase 3% to $510.3million, reflecting top-line growth driven by the $10-30 premium wine portfolio and improved costs.
Net profit after tax was up 2% to $250million, which TWE said was moderated by ongoing impacts from the global pandemic, significantly reduced shipments to Mainland China in F21 following the implementation of import duties and higher cost of goods sold on Australian sourced wine.
Net material items loss of $66.1million (post-tax) related to divestment of US brands and assets, the South Australian Luxury winery expansion and overhead and supply chain restructuring programs.
Strong operating cash flow reflects a lower Californian vintage intake and an adjusted Australian vintage, in addition to the shift in regional sales mix in Asia.
Key highlights from a regional perspective included:
• Asia reported a 15% decline in EBITS to $205.4million and an EBITS margin of 36.3% (down 2.8ppts) with shipments to Mainland China significantly reduced following the implementation of import duties on Australian wine (Mainland China EBITS declined $77.3m in F21). TWE noted: “Pleasingly this impact was partially offset by continued growth across the rest of the region, in particular for Penfolds Bins & Icons, despite ongoing pandemic restrictions to key Luxury sales channels. Margins were impacted by one-off product re-work and logistics costs, as well as committed brand investment in Mainland China.”
• Americas reported a 23% increase in EBITS to $168.3million and an EBITS margin of 17% (up 4.2ppts), with positive momentum accelerating across the retail and e-commerce channels for TWE’s Premium brand portfolio which continues to outperform the market, led by 19 Crimes.
• ANZ reported a 10% increase in EBITS to $142.7million and an EBITS margin of 23.7% (up 1.7ppts) reflecting ongoing portfolio premiumisation, including growth in Penfolds Bins & Icons.
• EMEA reported a 6% decline in EBITS to $46.6m and an EBITS margin of 11.3% (down 2.1ppts), with 12% top-line growth driven by strong performance in retail channels. Offsetting were higher COGS and higher CODB, including one-off Brexit related costs.
TWE’s Chief Executive Officer Tim Ford (above, middle) said: “F21 was a year of both significant change and achievement for our business, with the financial results we have announced today a testament to the commitment and strength of our global teams. Most pleasingly, despite a backdrop of significant external disruption, we have delivered on the priorities we set for ourselves at the start of the year, and therefore we remain very well placed to deliver on the long-term growth ambitions we set out in our TWE 2025 strategy.”
Future perspectives for TWE
TWE said the outlook for FY22 was positive on its outlook across key markets outside of Mainland China, with its focus to be on delivering continued momentum behind the Premium portfolio.
In addition, TWE said it will continue to execute plans to deliver growth for Penfolds Bins and Icons, with “encouraging performance having been delivered in F21, and particularly in 4Q21”.
The company noted that short-term impact of the COVID-19 pandemic on trading conditions in TWE’s key markets remains uncertain, despite recent reopening in on-trade channels and improving trade through cellar doors.
“Retail and e-commerce channels continue to perform strongly, albeit with moderating rates of growth, while travel retail remains severely impacted,” it said. “Continued reopening of key sales channels will be an important enabler of future Luxury portfolio growth.”
COGS per case are expected to remain elevated in F22, with benefits associated with the lower cost 2021 Australian vintage (Commercial portfolio) to be offset by the higher cost 2020 Australian vintage (for the Premium portfolio), recent higher cost US Luxury vintages and dis-synergies following the US Commercial portfolio divestment.
Ford concluded: “In FY22, we enter a new phase for TWE under our brand portfolio divisional operating model, led by Penfolds, Treasury Premium Brands and Treasury Americas. Whilst it’s early days in this change program, it is already very clear to our teams that with each division focused on their unique strategic priorities and performance accountabilities, we are better positioned to take advantage of previously untapped growth opportunities across the globe. This is a truly exciting stage in our journey as we progress deliberately and at pace towards our ambitions and goals.”