Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

TWE report: have Treasury Wine (ASX:TWE) shares gone off?

Australia’s largest wine producer, Treasury Wine Estates Ltd (ASX: TWE), released its FY21 interim results today. In early afternoon trade, the Treasury Wine share price has edged 1% higher to $10.

Pandemic, China impacts TWE performance 

TWE’s revenue declined 5.9%, to $1.41 billion, as a result of the ongoing impact of the global pandemic’s disruptions to key sales channels for luxury wine, the impact of tariffs imposed by China, and reduced commercial volume in the United States.

The company’s cost of goods per case increased by 2.8%, largely driven by lower volume and higher costs offset somewhat by a favorable product mix.

Net Profit After Tax (NPAT) decreased 24% to $175.3 million, as the significant reduction in operations from China flows through to the profit and loss statement. NPAT will likely be lower in the second half as Treasury Wine experiences a full six months without contribution from China.

Return on Capital Employed – a measure of capital allocation, declined from 13.6% to 9.5% as a result of lower NPAT.

On a more positive note, TWE’s retail and e-commerce channels continue to grow across all geographies, reflecting increased in-home consumption of well-known and trusted brands during the pandemic.

The company announced an interim dividend of $0.15 per share. This was down 25% to $0.20 per share from the dividend paid in 1H20.

Management announced a new divisional operating model, aimed at maximizing focus across its key brand portfolios, rather than geographical regions.

From FY22, Treasury Wine will operate under three new internal divisions: Penfolds, Treasury Premium Brands and Treasury Americas.

Despite management shooting down speculation of a Penfold’s demerger, this organisational change could be the catalyst to finally realise the value with the vintage brand.

The company did not provide any full-year guidance.

My take

If you were Tim Ford, the recently promoted CEO of Treasury Wine, it would be difficult to think of a worse combination of external events to walk into for your first six months on the job. Losing your number one growth engine, China. A global pandemic. A $46.5 million write-down. Even the planned demerger of Penfolds seems a distant memory.

The positive news for investors (if there is any), is that no much else can go wrong. Future results in the near-term will likely be ugly, as the Chinese operations are removed.

However, if management can steer existing premium inventory to new markets, refocus operations in the United States and grow the e-commerce business, I see light at the end of the tunnel.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content