Skip to main content

Penfolds the real treasure

By Wednesday 16 August 2023August 21st, 2023No Comments

Treasury Wine Estates recorded a 3.3 percent fall in net profit to $254.5 million for the 2023 financial year. Revenue fell 1.7 percent to $2.49 billion.

Penfolds – which now accounts for 62 percent of total earnings – reported a 14.2 percent increase in EBITS to $364.7 million and an EBITS margin of 44.5 percent (in line with F22).

Strong NSR (net sales revenue) growth of 14.3 percent was delivered through Asia, Australia and EMEA, reflecting the continued momentum behind the Penfolds strategy to build distribution and grow consumer demand, according to the company.

“In addition,” says TWE, “the successful launch of One by Penfolds and growth of the multi-COO portfolios contributed to NSR growth, particularly in Asia.

“On a constant currency basis, NSR and EBITS increased 13.8 percent and 15.5 percent respectively.”

CEO Tim Ford says Penfolds’ performance was “the standout” for the year.

“In F23, we have once again delivered margin accretive earnings growth while continuing to navigate the tightening economic environment across a number of our key markets,” he says.

“At the same time, we made significant progress in strengthening our operating models for the future.

“The Penfolds result was the standout, with strong top-line Luxury growth reflecting the unparalleled strength of this exceptional brand and outstanding execution by the team.”

He says Treasury Americas Luxury portfolio execution was a highlight, with price increases and growth in distribution achieved despite significant volume availability constraints, setting a strong platform for future growth.

“And Treasury Premium Brands made significant headway towards its new operating model, right-sizing the cost base for the future while enhancing both operational and strategic flexibility, and we will continue to assess additional optimisation initiatives,” Ford says.

“We enter F24 with confidence that the execution of our premiumisation strategy will continue to deliver our long-term growth ambitions through the cycle.

“We are a much stronger business today and are well placed to succeed in the current macro-environment where consumer demand for Luxury wine is strong and Premium wine remains resilient.”

TWE notes “the continued improvement in Australian and Chinese relations” which may have the potential for a future review of tariffs on Australian wine.

“In light of this TWE will take a measured approach to the phasing of Penfolds shipments across all markets in order to retain the flexibility of its global distribution and pricing model, which is planned to result in Penfolds EBITS being weighted to the second half of F24.”

TWE describes the 2023 vintage in Australia as “a high-cost vintage”.

Corporate costs increased 9.9 percent driven by investment in cloud-based technology and higher employee expenses.

Meanwhile Paul Rayner will retire as chairman at the AGM on 16 October.

The Board has appointed John Mullen as chairman elect. He joined the Board in May and is an independent non-executive chairman of Telstra Corporation and Brambles Ltd.

Related content

Penfolds unveils new $15o Chinese wine

Penfolds To Be Made In China

Penfolds Going “Bigger And Better In America”

Leave a Reply