An ‘outstanding’ performance in Asia helped Penfolds, Wolf Blass and Beringer owner Treasury Wine Estates to more than double profits in the first half of its financial year.
Penfolds owner Treasury Wine Estates (TWE) said net profits before one-off charges reached A$87.6m in the first half of the wine firm’s fianancial year, to the end of December 2015.After charges, profits were still up by 42%, at A$60.6m.
Net sales increased by 15% versus the same six months of the previous year.
The Australia-based wine business saw its share price increase by 10% this week to A$9.4 (ended 19 February), putting it 13.5% up in 2016 so far and 85% higher than at this point last year. The firm rejected a takeover offer of A$5.20 per share in 2014.
Treasury, which bought most of Diageo’s wine interests in late 2015, said it was now building a more balanced business, with each of its regions – Australia/NZ, Americas, Europe and Asia – delivering earnings growth.
But Asia was the star performer, more than doubling sales volumes to 1.195m cases, with sales up by 123% and profits rising by A$26m to A$46.5m.
Treasury attributed this to growing consumer demand for imported wine and enhanced routes-to-market in China, Singapore, Malaysia and Japan, with Penfolds, Wolf Blass, Rawson’s Retreat, Beringer and Lindemans leading the charge.
Profits had grown ahead of revenues, the company added, thanks to better sales of higher-priced wines.
Treasury said the fundamentals of the Asia markets ‘continue to be highly attractive, with Asian consumers increasingly turning to imported wine as the alcoholic beverage of choice’.
Elsewhere, Australia and New Zealand reported 6% profits growth as Treasury out-performed a flat market in Australia, while the Americas posted a 67% profits boost on good growth for higher-priced wines and favourable exchange rates. Europe’s profits more than doubled to A$17.2m.
‘Our interim result demonstrates a continuation of the momentum delivered in fiscal 2015 and highlights the benefits of having repositioned our business to deliver strong earnings growth on a balanced, sustainable base,’ said Treasury CEO Michael Clarke.