2024-02-15 02:36:06 ET
Treasury Wine Estates Limited (TSRYY)
Q2 2024 Earnings Conference Call
February 14, 2024 06:30 p.m. ET
Company Participants
Tim Ford - Managing Director, Chief Executive Officer
Stuart Boxer - Chief Financial and Strategy Officer
Peter Neilson - Managing Director, Treasury Premium Brands
Ben Dollard - President, Americas
Tom King - Managing Director Penfolds
Conference Call Participants
Lisa Deng - Goldman Sachs
Michael Simotas - Jefferies
David Errington - Bank of America
Bryan Raymond - JPMorgan
Tom Kierath - Barrenjoey
Richard Barwick - CLSA
Craig Woolford - MST Marquee
Ben Gilbert - Jarden
Phil Kimber - E&P Capital
Shaun Cousins - UBS
Ross Curran - Macquarie
Sam Teeger - Citi
Presentation
Operator
Thank you for standing by, and welcome to the Treasury Wine Estates, Fiscal Year 2024 Half Year Results. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions].
I would now like to hand the conference over to Mr. Tim Ford, Managing Director and Chief Executive Officer. Please go ahead, sir.
Tim Ford
Good morning, everyone. Thanks for joining us for our half year results briefing. With me here in Melbourne is Stuart Boxer and Peter Neilson. Ben Dollard is in California and Tom King is in Paris, in France. I'm sure he'll explain why as we get through his part of the conversation today.
I'm pleased to announce the results today for the first half of Fiscal ‘24. It's a period where our group performance was broadly in line with expectations and reflective of the continued strengthening of our Luxury wine portfolio and the strong consumer demand that still exists around the world for Luxury brands.
There's no question, though, that it is a challenging operating environment with pretty competitive market dynamics, but I'm pleased with our underlying operating performance, in particular the dynamic way in which our teams are managing this environment and evolving our business, focused on continued execution of our strategy, which we remain very confident will support our long-term growth ambitions.
From a numbers point of view, EBITS declined 6% in the half to $289.8 million and EBITS margin declined 2.9 percentage points to 22.6%, which reflects our deliberate approach to the phasing of Penfolds Bin and Icon shipments across the year, in order to retain flexibility in our global distribution and pricing models, given the current review of tariffs on Australian wine into China.
Despite holding back this portion of the Bins and Icon shipments, Penfolds continued a strong momentum, particularly in Asia and Australia, yet to still grow EBITS whilst the Treasury Americas Luxury portfolio returned to growth, which again is pleasing, driven by a modest increase in availability.
Overall, our Luxury net sales revenue grew 4% globally, supporting stability in our top line and offsetting the lower Premium commercial revenue, which declined 2% and 6% respectively and drove the EBITS declines in Treasury Americas and Treasury Premium brands.
Market trends in the period were broadly in line with our expectations. As I said, consumer demand for Luxury wine remaining strong in our key markets, the ongoing resilience in the Premium price points and the continued shift to consumer preference away from the commercial wine in the category. And we expect these trends to continue through the remainder of this fiscal year.
Given the planned profile of the Penfolds Bin and Icon shipments, we expect a stronger second half to deliver mid to high single digit organic EBITS growth for the full year, which excludes the additional expected EBITS from DAOU of U.S. $23 million to $25 million in the second half.
As we look forward over the half ahead, we are laser focused on three key priorities. The first being the expedited review of tariffs on Australian wine which remains ongoing, with a determination anticipated in March. And we are well prepared and well placed to re-establish our Australian country of origin portfolio in China, should the review result in the removal of these tariffs. Importantly, our outlook for the second half that I've just explained does not include any benefit from a positive outcome in relation to the tariff review.
Treasury Americas following the acquisition of DAOU is also very focused on driving its clear strength we now have as the leading Luxury wine portfolio in the United States. And with a return to normalized availability of Luxury wine as we move forward into F’25 and we transition away from the 2020 Vintage, we expect it to support growth of our existing portfolio plus the acquisition of DAOU. ...
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Treasury Wine Estates Limited (TSRYY) Q2 2024 Earnings Call Transcript