International push pays off for Treasury Wine
Written on the 31 January 2018 by David Simmons
A push into China and continued expansion in the US has paid off for listed wine exporter Treasury Wine (ASX: TWE) with an interim result which shows the company lifted its first-half profit 37.4 per cent to $187.2 million.
Treasury, which is number 11 in our Melbourne Top 50 Companies List, says it is targeting "accelerated growth" for the next two years and beyond, likely tracking on with its push into the US.
Revenue for the six months to December 31 was slightly lower than the previous corresponding period but earnings were up 24.9 per cent.
The earnings boost, according to Treasury Wine, is a result of the completion of the integration of its Diageo acquisitions and a reduction in supply chain costs. These changes also allowed the company to lift its interim dividend by two cents to 15 cents.
A shift away from lower margin commercial wine, and a renewed focus on higher end products, has also helped the company. The US and UK market is turning away from the more commercial brands and the company says it has seen more interest in top shelf products.
Chief Executive of Treasury Wine, Michael Clarke, says the company has signed deals to overhaul its distribution and sales methods in the US. The new approach will mirror its operations in other parts of the world.
"I am very excited about the outlook for the company, and I am confident that the business model changes we are making this year, along with an increased availability of high-end wine, will set Treasury Wine up for accelerated growth in F Y19, FY20 and beyond," says Clarke.
The company expects its 2019 earnings will grow by 25 per cent.
Treasury Wine's positive interim results follow news that demand for Australian wine in China is pushing towards $1 billion.
Business News Australia
Author: David Simmons