The Treasury Wine Estates Ltd (ASX: TWE) share price is having an uneventful start to the day following the release of the company's FY23 full-year results.
At the time of writing, shares in the iconic wine business are 1.1% higher at $11.51 apiece.
Treasury Wine share price up on strong year for premium wine
Here are the highlights after scrolling through the winemaker's FY23 full-year results:
- Net sales revenue (NSR) down 2.2% to $2,423 million
- Earnings before interest, tax, SGARA, and material items (EBITS) up 11.4% to $583.5 million
- EBITS margin improved by 0.029% to 24.1%
- Net profit after tax (NPAT) down 3.3% to $254.5 million
- Final fully franked dividend of 17 cents per share declared, increasing 6.25%
What else happened in FY23?
Amid a cost-of-living crisis, one would think little indulgences such as a bottle of red would be first on the chopping block. However, Treasury Wine Estates' results show a relatively resilient company despite the economic pressures.
The company's luxury Penfolds label did most of the heavy lifting during the financial year. Penfolds dialled it up 14.2% to $364.7 million in EBITS, accounting for almost 63% of group earnings. In contrast, the lesser priced picks under its 'premium brands' banner — Pepperjack, 19 Crimes, Squealing Pig, and others — suffered an earnings slip.
Furthermore, net sales remained robust despite price rises being implemented across Treasury Wines' brands. The success of these increases was displayed in the company's net sales revenue per case (pictured above), increasing 12.7% from the prior year.
The Treasury Wine share price struggled throughout May and June, as shown above, after the release of an update. On 25 May 2023, it was announced the company would adjust its organisational structure to reduce fixed costs.
The possible divestment of 'selected assets' was mentioned in that release. Shareholders reacted by selling down shares in the company by 7.8% on that day.
What did Treasury Wine management say?
Treasury Wine Estates' CEO Tim Ford spotlighted the Penfolds segment in his remarks today, stating:
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. 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.
Ford spoke confidently about FY24, partly due to consumer demand for luxury wine being strong, while premium wine 'remains resilient'.
What's next for Treasury Wine?
The company's management refrained from providing any specific guidance. Instead, the team shared a generally optimistic view for growth in FY24. In addition, the long-term financial objective of delivering top-line growth and high-single-digit average earnings growth was included.
Management also noted the improving relations between Australia and China. In turn, Treasury Wine will begin positioning for shipments in all markets.
Lastly, the retirement of chair Paul Rayner has been revealed today. Serving on the board since the company's inception in 2011, Rayner will retire following the annual general meeting on 16 October. John Mullen has been appointed as the chair-elect.
Treasury Wine share price snapshot
It's been a rocky year for Treasury Wine shares, falling 7.6% over the past 12 months. For comparison, the S&P/ASX 200 Index (ASX: XJO) has managed a 3.4% gain during this time.
Although the winemaker has shown resilience under tough conditions, there is no denying the slower top-line growth than what was offered historically. As such, investors are treading cautiously regarding the Treasury Wine share price.
