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Treasury Wine Estates Updates Market, Sees Rebound Ongoing

May 13, 2021

Treasury Wine Estates has released updated guidance for its fiscal year ending in June, with the company expecting EBITS to be in the range of A$495 million ($382m) to A$515 million ($398m), down from A$534 million ($412m) last year. While the company expects a profit decline for the year, its update marks an improvement over analyst expectations and “would represent growth of 33% in 2H21 compared to the prior corresponding period,” according to the company.

Treasury added that over the long-term it’s targeting “sustainable top-line growth and high single-digit average earnings growth” as it continues to premiumize its sales mix. It’s also aiming for 45% EBITS margin for its Penfolds business, including investment to grow distribution as the brand ups its presence in the U.S., and 25% EBITS margin for its Treasury Americas business. Treasury Americas saw sales slip 7.2% to A$535 million ($414m) year-on-year in the six months through December, as EBITS declined 2.7% to A$83 million ($64m), but the company noted that strong growth in retail and e-commerce channels allowed the Americas business to increase sales 17% and EBITS 70% compared with the previous six-month period.

Treasury recently announced an expansion of its partnership with second-ranked U.S. distributor Republic National Distributing Co. (RNDC), with RNDC now handling more than one-third of the company’s U.S. business. The move followed Treasury’s licensing of about 4.2 million cases of annual commercial wine volume to The Wine Group in March. “With our divestiture of commercial wine brands, we decided to reevaluate our business needs to position our company for future growth,” said TWE Americas president Ben Dollard.

Additionally, Treasury today announced a new commitment to reach net zero emissions by 2030 as well as 100% renewable electricity by 2024, and stronger water stewardship with plans to undertake a comprehensive review of its water footprint.—Daniel Marsteller

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