Exclusive news and research on the wine, spirits and beer business

Treasury’s Profit More Than Doubles On Premiumization, Diageo Deal

August 18, 2016

While everyone in the drinks business talks about premiumization, perhaps no one has more effectively implemented a premiumization strategy than Treasury Wine Estates CEO Michael Clarke. Since Clarke took the helm of the then-ailing TWE in early 2014, the Australian wine company has considerably culled its portfolio—essentially halving the number of brands in its portfolio—while sharpening its focus on the high end.

That approach has clearly paid off, with TWE announcing earlier today that reported net profit after tax and earnings per share both more than doubled in its recently completed fiscal 2016—to A$179.4 million ($137.6m) and A25.1 cents ($0.19), respectively. While the acquisition of Diageo’s wine business in October 2015 improved the profit picture considerably, even without that additional business, TWE’s earnings before interest, tax, SGARA and material items (EBITS) jumped by 37% in the 12 months ending June 30.

TWE has been extremely successful at trading up its customer base. Without the Diageo business—which added 3.4 million nine-liter cases to TWE’s total volume—the company’s volume inched up by 0.2% to 30.2 million cases. However, net sales rose by 9.4% to A$2.03 billion ($1.56b), as revenue per case increased by 9.2%—from A$61.66 ($47.29) to A$67.31 ($51.62).

In the Americas, TWE’s EBITS grew by 64%, due largely to portfolio premiumization, the impact of the Diageo acquisition and favorable currency exchange. The company’s net sales in the region advanced by 27.7%, or 14.9% on a constant currency basis.

TWE’s share price surged after the results were announced, finishing the day at A$10.68 ($8.19)—an increase of nearly 12% over yesterday. —Peter Zwiebach

Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.

Tagged : , , ,

GET YOUR FIRST LOOK AT 2021 DATA AND 2022 PROJECTIONS FOR THE WINE AND SPIRITS INDUSTRIES. ORDER YOUR 2022 IMPACT DATABANK REPORTS. CLICK HERE.

Previous :  Next :