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Highlights
- Revenue Growth: Net sales revenue (NSR) surged 20.2% to $1.54 billion.
- Profit Increase: Net profit after tax rose 31.5% to $239.6 million.
- Weaker Guidance: EBITS forecast for FY 2025 at low end of expectations ($780M-$810M).
Shares of Treasury Wine Estates Ltd (ASX:TWE) tumbled 4.57% to $10.64 on Thursday despite the company reporting profit growth in its half-year results. Investors reacted to the wine giant’s weaker-than-expected full-year earnings guidance, which overshadowed an otherwise significant financial performance.
For the six months ending 31 December 2024, Treasury Wine’s net sales revenue (NSR) rose 20.2% to $1.54 billion, while earnings before interest, tax, and SGARA (EBITS) jumped 35.1% to $391.4 million—exceeding analyst expectations. The company’s EBITS margin improved by 2.8 percentage points to 25.3%, reflecting a significant pricing mix and operational efficiencies.
Despite these positive metrics, management's revised FY 2025 EBITS guidance of $780 million—the low end of its previous $780M–$810M range—disappointed investors, sending the stock into decline.
Performance Breakdown: Strength in Premium Brands, Weakness in Lower-Tier Wines
Treasury Wine’s performance was driven by demand for premium wines, particularly in Asia and the U.S., while its lower-priced wine brands struggled.
- Penfolds: Sales surged 24.4% to $557.4 million, with EBITS up 33.9% to $250.2 million. Growth was fueled by high demand in China, where the reintroduction of Australian COO (country of origin) wines saw encouraging sales.
- Treasury Americas: Sales soared 42.2% to $631.1 million, with EBITS climbing 66.9% to $155.3 million, thanks to the December 2023 acquisition of DAOU Vineyards.
- Treasury Premium Brands: Sales fell 8.6% to $355.7 million, with EBITS plunging 49.9% to $22.9 million. The segment continues to struggle due to soft demand for lower-priced wines and underperformance relative to industry trends.
Despite positive earnings, Treasury Wine’s guidance weighed on market sentiment. The company attributed the lower forecast to ongoing challenges in the Treasury Premium Brands segment, which is expected to continue underperforming.
Dividend Boost and Outlook
In a show of confidence, the company raised its interim dividend by 17.6% to 20 cents per share (70% franked), representing a payout ratio of 68%.
