Strong premium brands performance lifts Treasury Wine shares
Make us a preferred source
Make us a preferred source on Google
More news: Shares in Treasury Wine Estates rose nearly 2% to $12.32 in early trading on the ASX after Australia's top winemaker reported higher full-year revenue and margins as the China market reopened and its US acquisition boosted returns.
The company posted a slide in statutory profit on the back of previously-flagged impairments against its lower-end brands, which it is looking to divest.
Analysts backed the result, saying its FY25 outlook implied strong year-on-year growth. Jarden analysts hold a 'buy' rating and a price target of $14.60 on the share.
What they said: "Overall, higher multiple businesses outperforming and we think TPB (Treasury Premium Brands) global division formation could potentially enable a demerger catalyst. Overall, we see this as a good result, with consensus forecasts unlikely to move," Jarden analysts said in a note.
Treasury Wine annual profit slumps on impairments
The news: Treasury Wine Estates has posted a slump in full-year profit due to hefty impairments against its lower-end brands but a reopening of the premium China market helped boost sales and margins.
The numbers: The company reported a 61.1% drop in full-year net profit to $98.9 million, after taking a pre-tax non-cash impairment charge of $354 million relating to a write-down of goodwill and value of commercial brands, including Wolf Blass, Yellowglen, Lindeman’s and Blossom Hill.
However, revenue jumped 12.9% to $2.49 billion as the China market reopened and its US acquisition boosted its returns.
It declared a final dividend of 19 cents per share, up from 17 cents a share a year ago.
The context: Australia’s top winemaker said earnings increased 12.8% to $658.1 million, driven by strong luxury portfolio growth in Penfolds and its Treasury Americas arm. The DAOU winery business, which it acquired late last year, delivered second-half earnings of USD24.7 million (37.5 million), in line with guidance.
Treasury Wine expects to deliver earnings in the range of $780 million to $810 million in FY25, reflecting continued strong growth in its luxury portfolio of Penfolds and Treasury Americas, with stability expected across the remainder of its global brand portfolio.
The winemaker, which gets three-quarters of its earnings from high-end wines like Penfolds, has pushed deeper into the premium segment with the acquisition of California-based DAOU.
Earlier this month the company announced it would seek to divest its commercial brand portfolio, which mainly includes brands below the $10 price point and which make up less than 5% of the group’s gross profit.
The source: ASX announcement
