The Gold Coast Bulletin
TREASURY WINE VOWS EARNINGS GROWTH RETURN
TREASURY Wine Estates is hoping to plug the massive profit gap left in its business from the loss of the highly profitable Chinese market last year following the imposition of 200 per cent-plus tariffs on the Australian wine sector, and is forecasting a return to high single-digit earnings growth.
The winemaker is also promising greater benefits from a review of its global supply chain and has set out its earnings targets for its key operations across its flagship premium brand Penfolds, commercial wines and its North American business.
Treasury Wine is also targeting net zero emissions by 2030 under an accelerated sustainability program.
In an investor day held on Thursday, the maker of wines such as Penfolds, Wolf Blass and Lindemans said it expects fiscal 2021 pre-tax earnings to be in the range of $495m to $515m, ahead of current market consensus expectations
That would represent growth of 33 per cent in the second half compared to the prior corresponding period at the midpoint of the guidance range.
As part of the investor day, Treasury Wine also provided for the first time key financial metrics around its Penfolds brand. It showed the Penfolds group of wines had sales of $544.3m in 2018, rising to $816m in 2019 and $765.2m. Penfolds had earnings of $363.3m in 2019 and $357.3m in 2020. Its earnings margins were 47 per cent in 2020, up from 45 per cent in 2019.
The investor day also fleshed out expansion plans for the iconic Penfolds range, including a release of French grown Penfolds wines in 2023, following on from a recent release of Penfolds wines grown and made in California.
Treasury Wine said over the longterm it was targeting the delivery of sustainable top-line growth and high single-digit average earnings growth.
Its long-term financial objectives also include the continued premiumisation of its sales mix, expansion of its group earnings margin to the target of 25 per cent and restoring and then growing return on capital.
Earlier this year Treasury Wine, under its recently-appointed chief executive Tim Ford, unveiled a structural separation of the group, creating new divisions around its Penfolds wine business, commercial wines and its operations in North America.