Treasury Wine shares roar 16% on restructure
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The news: The share price of Treasury Wine Estates (TWE) had jumped 15.6% to $4.68 at 10:48am AEST on Wednesday after the global wine producer announced it was restructuring the business to focus on geographic markets.
The numbers: The company said it had taken on an additional $300 million in debt commitments to refinance FY27 maturities and increase the company’s liquidity, expected to exceed $1 billion by the end of this financial year.
The company also provided a Q3 update, telling the market depletions in China were up 40% on a seasonally adjusted basis through the Chinese New Year period. Across the quarter they were up 11% in China, 14% across Asia ex-China, and up 9.1% in the Americas.
The context: From 1 October, Treasury will transition to a regional operating model across its four markets of the Americas, Australia, New Zealand and Europe, greater China as well as emerging markets (covering the rest of Asia, the Middle East and Africa).
Each region will house its own front-end commercial capabilities across sales, market and direct to consumer and commercial strategies, supported by the larger group.
The company said it would deliver on depletions-led growth, increased accountabilities, speed up decision making, and remove duplication and enable automation, targeting a $100 million cost reduction across the business over the next two to three years.
Treasury said it will enhance its focus on luxury brands, particularly Penfolds, and retain central control of brand strategy.
The company is also transitioning to a unified brand portfolio with further updates promised at its investor day on 4 June.
The executive leadership team will be realigned, seeing Penfolds managing director Tom King appointed to a chief commercial officer role, leading sales, marketing and direct to market strategies across regions.
It comes as Treasury chief executive Sam Fischer tries to arrest the multi-year slide in Treasury performance. Earlier this month former COO Robert Foye unveiled an activist campaign to try and turn things around, as other investors increase their holdings, suggesting the company may be oversold.
What they said: Fischer said the strategy would improve the company’s operational capability.
“We are reshaping TWE to drive clearer accountability for performance and to enable faster, more market-connected decision-making as a foundation for consistent depletions growth,” Fischer said.
“Combining the deep local insight of our in-market teams with the scale and expertise of our global functions will step change in-market execution, whilst retaining our enhanced focus on Penfolds and other priority luxury brands.”
The source: ASX
