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Shares of Treasury Wine Estates Ltd (ASX:TWE) are experiencing a notable uptick on Thursday, with the stock trading 1.5% higher at AU$12.29 in the morning session. This outperformance comes as the S&P/ASX 200 Index (ASX:XJO) rises modestly by 0.3% at the same time, reflecting investor optimism following the company’s latest financial results.
Full-Year Financial Highlights Drive Stock Gains
Treasury Wine released its full-year financial results for the fiscal year ending 30 June 2024 (FY 2024), which have been well received by the market. Key highlights from the results include:
- Net Sales Revenue: AU$2.74 billion, marking a 13.1% increase from FY 2023.
- Earnings Before Interest, Tax, SGARA, and Material Items (EBITS): AU$658 million, up 12.8% year-on-year.
- Statutory Net Profit After Tax (NPAT): AU$99 million, representing a significant 61.1% decline from the previous year.
- NPAT Before Material Items and SGARA: AU$408 million, up 8.3% from FY 2023.
- Final Dividend: 19 cents per share, 70% franked, an increase from last year’s final dividend of 17 cents per share.
Investors React to Non-Cash Impairment and Dividend Increase
Despite the sharp 61.1% year-on-year decline in statutory NPAT, driven by a non-cash impairment charge of AU$354 million (post-tax AU$290 million) related to the Treasury Premium Brands division, investors are focusing on the positives. The company’s decision to sell several lower-shelf brands, including Lindeman’s, Yellowglen, Wolf Blass, and Blossom Hill, reflects a strategic shift towards higher-margin luxury brands.
Notably, the company’s full-year dividend payout has increased to 36 cents per share, representing 72% of NPAT and a 16% rise from the total dividends paid out in FY 2023. This dividend boost has likely contributed to the positive market response.
Removal of Chinese Tariffs and Luxury Segment Growth
Among the encouraging developments for Treasury Wine in FY 2024 was the removal of tariffs on Australian wine imports into China. The company quickly moved to re-establish its Penfolds Australian COO portfolio in China during the fourth quarter of FY 2024. Initial shipments and customer demand have been in line with expectations, offering a potential growth avenue in a previously constrained market.
Additionally, Treasury Wine reported strong momentum behind its luxury brand portfolios, particularly Penfolds and Treasury Americas, which now account for over 75% of the company’s Group EBITS. This focus on luxury wine has been a key driver of the company’s overall growth.
CEO Comments and Strategic Outlook
CEO Tim Ford expressed confidence in the company’s strategic direction, stating, “Our fiscal 2024 performance reflects the excellent momentum we continue to build behind our Luxury brand portfolios in Penfolds and Treasury Americas.” Ford emphasized that these luxury platforms are strong drivers of long-term growth for Treasury Wine Estates.
Looking ahead, Treasury Wine has provided guidance for FY 2025 EBITS in the range of AU$780 million to AU$810 million. This forecast reflects continued strong top-line growth in the luxury segments, with stability expected across the rest of its global brand portfolio.
Stock Performance Snapshot
With the intraday gains on Thursday, the Treasury Wine share price has risen by over 14% so far in 2024, underscoring the company’s positive trajectory and investor confidence in its future prospects. As the company continues to execute its strategic priorities, shareholders will be watching closely for continued growth in its high-margin luxury wine segment.
