Treasury Wine Shares Soar On Releasing Financial Interim Update For FY2019

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Treasury Wine Shares Soar On Releasing Financial Interim Update For FY2019

On 11 January 2019, Treasury Wine Estates Limited (ASX: TWE) released an update regarding Interim 2019 Financial Results. Treasury Wine Estates is an ASX listed company involved in the business of producing and distributing world-class wines across the globe. The company owns a rich portfolio of wine brands and viticulture assets. Its product line includes 19 Crimes, Acacia, Blossom Hill, Lindeman’s, Matua, Rosemount Estate, Wolf Blass, Sterling Vineyards, and many more. 

Treasury Wine accepts the continued volatility in response to uncertainty within the US and Asian markets. The company releases following positive financial scenario:

  • Robust trading performance across all operating regions is recorded.
  • The company expects EBITS to be within the range of A$335m to A$340m for 1H19, much above the expectation of A$332m.
  • Full year guidance of approximately 25% reported EBITS growth for fiscal 2019 is reiterated.

The company released following outlook for FY19 in its annual report released last year:

  • US new operating model to be embedded in 2H19, expected to drive brand visibility, distribution collaboration and EBITS dollar and margins growth.
  • Operational efficiency and cost reduction contributed by “Simplify for Growth” program.
  • Maintenance and replacement capital expenditure to be in the range of $130-140 million.
  • EBITS margin of 25% is anticipated.

The financial update places Treasury Wine Estates in a better position as compared to its US competitor Constellation Brands, which released reduced wine sales for Q32018. The sales of US winemaker for the third quarter grew by meagre 0.5% to USD 670.3 million.

The company will announce its audit reviewed results for the first half of the fiscal year 2019 on 14 February 2019.

In its annual financial results for the year ended 30 June 2018, Treasury Wine reported strong financial performance with an 18% increase in EBITS to $530.2 million. The company marked its fourth consecutive year of double-digit growth. Three percentage points increase in EBITS margin to 21.8% was declared by the company. Statutory Net Profit After Tax of $360.3 million, with an increase of 34%, was maintained.

The American region delivered 1.7% increase in EBITS to $193 million, the Asian region delivered 37.5% increase in EBITS to $205.2 million, Australia and New Zealand reported 25.9% increase in EBITS to $136.1 million and the European region delivered 9.3% increase in EBITS to $49.5 million.

The company completed $300 million on-market share buyback during FY18 at an average price of $15.41.

On 7 December, Treasury Wine announced The Vanguard Group Inc as its substantial shareholder with 5% ownership interest in 35.95 million securities.

On 20 November 2018, Treasury Wine announced the establishment of a new USD 350 million syndicated debt facility in order to strengthen the balance sheet, expand debt maturity profile and diversify sources of funds. The sourced fund was planned to be used for working capital requirements.

Stock performance: Post releasing Financial Interim Update for FY2019, the shares of Treasure Wine skyrocketed by 4.63% closing at A$14.905 on 11 January 2019. The stock has generated a negative return of 18.88% over the last six months, however, is up by 3.60 % over last month.


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