Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — FY2021 Earnings Presentation
35 slides from Treasury Wine Estates's earnings presentation, Aug 19, 2021
Slide 1: 2021 Annual Results Investor and Analyst Presentation
19 August 2021 ASX ANNOUNCEMENT 2021 Annual Results Investor and Analyst Presentation Enclosed are the presentation materials for the investor and analyst webcast and conference call to be hosted by Treasury Wine Estates commencing at 10:00am (AEST) on 19 August 2021. Links to register for the confe
Slide 2: F21 Full Year Results
F21 Full Year Results 19 AUGUST 2021
Slide 3: Introduction
Introduction Tim Ford Chief Executive Officer
Slide 4: F21 Financial Highlights
F21 Financial Highlights 1,2,3,4,5 Organic6 growth a highlight in F21, underpinning a strong and flexible balance sheet NSR EBITS NPAT $2.6bn (3.0)% Reported $510.3m (0.4)% Reported $309.6m 3.0% 4.4% Organic 3.5% Organic NSR per case EBITS margin EPS 19.9% 0.2ppts 42.9cps 2.9% $83.8 2.4% 0.6 ppts Ca
Slide 5: Earnings performance
Earnings performance 2H21 regional performance reflects continued strength in execution of plans Reported EBITS performance by half: F20 and F21 (A$m)1 140.0 120.0 100.0 86.1 80.0 73.4 67.8 60.0 44.4 46.2 37.6 40.0 29.3 22.1 18.4 20.0 5.3 0.0 Americas ANZ Mainland China Rest of Asia EMEA 1H20 2H20 1
Slide 6: Status of key sales channels
Status of key sales channels Sales channels remain in varied states of recovery; recent reopening of on-premise and cellar doors Indicative NSR Asia Americas ANZ EMEA contribution1 and F21 channel status by % NSR Status % NSR Status % NSR Status % NSR Status region Legend Bricks & Mortar Retail 23%
Slide 7: Executing the Game Plan
Executing the Game Plan Delivering against our priorities in a year of significant change 01 02 03 Manage performance Shift to a consumer Optimise our global led marketing model supply chain • Strong execution and • Embedded consumer and • Progressed extensive global organisational resilience in a e
Slide 8: Executing the Game Plan (continued)
Executing the Game Plan (continued) Delivering against our priorities in a year of significant change 04 05 06 Accelerate separate Deliver the future state China import duties: focus across portfolio premium US wine business implement global response plan • Transitioned to new divisional • Our US bu
Slide 9: Financial Performance
Financial Performance Matt Young Chief Financial Officer
Slide 10: Key measures of performance
Key measures of performance 1,2 Group NSR (A$m) and NSR per case Group EBITS (A$m) and EBITS margin Return on Capital Employed (ROCE) Cost of Doing Business (CODB) margin 1. All figures and calculations are subject to rounding 9 2. TWE has updated its accounting policies in relation to the treatment
Slide 11: Material items
Material items Expected one- Total recognised Recognised in Material Items Benefits Benefits from off costs to date F21 Enable prioritisation of Divestment of US brands & assets premium focus brand portfolio as driver of F21 $(100.0)m $(62.3)m $(62.3)m (announced 17 February 2021) Americas regional
Slide 12: Balance sheet
Balance sheet 1,2,3 A$m F21 F20 Restated A strong, flexible and efficient balance sheet Cash & cash equivalents 448.1 449.1 Receivables 622.0 554.1 • Net assets declined $4.9m on a reported currency Current inventories 839.7 1,017.4 basis in F21 Non-current inventories 1,056.8 1,059.2 • Adjusting fo
Slide 13: Inventory analysis
Inventory analysis Inventory at book value split by segment1,2 • Total inventory volume in line with the prior year $839.7m $1,017.4m $1,056.8m $1,059.2m $1,896.5m $2,076.6m • Total inventory value declined $180.1m, or 9%, to $1,896.5m: − Excluding the impact of the stronger Australian dollar, total
Slide 14: Australian industry conditions
Australian industry conditions • Local retail demand conditions are positive, with Australian retail pricing remains stable1 category growth and pricing trends remaining constant1 • Key export markets continue to perform well, supporting continued demand for Australian wine2 • TWE has proactively ma
Slide 15: Cash flow and net debt
Cash flow and net debt1 A$m F21 F20 Restated EBITDAS 661.0 675.9 Continued strong operating cash flow performance Change in working capital (60.3) (22.2) Other items 65.6 (14.9) Net operating cash flows before financing costs, • Cash conversion of 100.8% reflects continued strong 666.3 638.8 tax & m
Slide 16: Capital expenditure
Capital expenditure A$m F21 F20 Restated Disciplined approach to capital allocation balancing investment to support future growth IT spend 10.7 16.2 Oak purchases 3.8 2.4 • Capital expenditure (capex) $121.2m in F21, including: Vineyard redevelopments 14.9 30.8 − Maintenance & replacement capex of $
Slide 17: Capital Management
Capital Management Leverage significantly improved, further enhancing our flexible and efficient capital structure • Investment grade credit metrics maintained: - Net Debt / EBITDAS1 1.6x at F21 (F20: 2.1x) inclusive of leases and 0.9x excluding leases - Interest cover of 11.9x at F21 (F20: 10.1x) •
Slide 18: Regional Performance
Regional Performance Tom King Managing Director, Penfolds Ben Dollard President, Treasury Americas Peter Neilson Managing Director, Treasury Premium Brands
Slide 19: Asia
Asia Regional performance1 Business headlines F20 F20 A$m F21 Restated % Restated % • EBITS declined 17.2% and EBITS margin declined 4.1ppts to 36.3%: Reported currency Constant currency − Volume and NSR declines of 30.7% and 8.1% respectively NSR (A$m) 565.3 617.1 (8.4)% 615.1 (8.1)% reflecting low
Slide 20: Americas
Americas Regional performance1 Business headlines F20 F20 A$m F21 Restated % Restated % • EBITS increased 54.1% and EBITS margin increased 5.7ppts to 17.0%: Reported currency Constant currency − Volume declined 8.7% and NSR increased 1.9%, reflecting strong NSR (A$m) 988.7 1,069.4 (7.5)% 970.3 1.9%
Slide 21: ANZ
ANZ Regional performance1 Business headlines F20 F20 A$m F21 Restated % Restated % • EBITS increased 3.1% and EBITS margin increased 0.3ppts to 23.7%: Reported currency Constant currency − Volume declined 7.8% and NSR increased 1.8%, reflecting NSR (A$m) 602.1 592.4 1.6% 591.8 1.7% increased contrib
Slide 22: EMEA
EMEA Regional performance1 Business headlines F20 F20 A$m F21 Restated % Restated % • EBITS increased 1.3% and EBITS margin declined 1.5ppts to 11.3%: Reported currency Constant currency − Volume and NSR increased 11.1% and 15.4% respectively, led by NSR (A$m) 413.5 370.6 11.6% 358.2 15.4% growth in
Slide 23: Outlook
Outlook Tim Ford Chief Executive Officer
Slide 24: F22 Group priorities
F22 Group priorities In F22, we move into the next phase of executing the Game Plan The world’s most admired premium wine company Divisional Treasury Treasury priorities Premium Brands Americas • Attract new consumers • Expand Premium portfolio • Drive relentless focus on premiumisation • Grow globa
Slide 25: Summary and outlook
Summary and outlook • F21 was a year of significant change and achievement, with strong execution delivering organic1 top- line and EBITS growth, in addition to continued premiumisation in each region • In F22, we are positive on our outlook across key markets outside of Mainland China and will be f
Slide 26: Questions
TREASURY WINE ESTATES Questions
Slide 27: Supplementary Information
TREASURY WINE ESTATES Supplementary Information
Slide 28: Volume
Volume Volume m 9Le F21 F20 % Americas 11.3 12.4 (8.7)% Asia 2.3 3.3 (30.7)% ANZ 7.2 7.8 (7.8)% EMEA 9.8 8.9 11.1% TWE Volume 30.6 32.4 (5.3)% • Americas: Decline in volume for the Americas of 8.7% driven by reduced Commercial volumes following the divestment of US Commercial brands, partly offset b
Slide 29: Impact of foreign exchange and hedging
Impact of foreign exchange and hedging F21 constant currency impact F22 EBITS sensitivity and risk management CFX Impact (A$m) EBITS Currency Primary Movement Sensitivity Pair Exposure Currency Underlying Hedging1 Total (A$m) AUD/USD and AUD/GBP (45.5) 12.5 (33.0) AUD/USD COGS, EBITS +1% (3.7) Net o
Slide 30: Impact of cloud computing accounting policy changes
Impact of cloud computing accounting policy changes Group profit and loss impact F18 F19 F20 $Am (unless otherwise stated) Reported Adjustment Restated Reported Adjustment Restated Reported Adjustment Restated Net sales revenue 2,429.0 - 2,429.0 2,831.6 - 2,831.6 2,649.5 - 2,649.5 NSR per case ($) 7
Slide 31: Impact of cloud computing accounting policy changes (continued)
Impact of cloud computing accounting policy changes (continued) Regional EBITS impact F18 F19 F20 EBITS A$m Reported Adjustment Restated Reported Adjustment Restated Reported Adjustment Restated ANZ 137.5 (0.1) 137.4 158.0 (4.8) 153.2 133.3 (3.2) 130.1 Asia 199.5 - 199.5 283.0 (1.9) 281.1 243.7 (2.2
Slide 32: Financials by division
Financials by division Penfolds Treasury Premium Brands Treasury Americas Corporate A$M, reported F21 F20 % F21 F20 % F21 F20 % F21 F20 % Volume 2.2 2.5 (8.7)% 17.2 17.6 (2.4)% 11.2 12.3 (8.8)% - - - NSR 788.9 765.2 3.1 % 840.7 869.7 (3.3)% 940.0 1,014.6 (7.4)% - - - ANZ 199.2 178.2 11.8 % 402.9 414
Slide 33: Reconciliation of key performance measures
Reconciliation of key performance measures Metric (A$M unless Management calculation F21 F20 Restated otherwise stated) EBITS Statutory net profit 250.0 245.4 Income tax expense 107.7 103.3 Net finance costs 73.5 85.9 Material items 88.5 36.6 SGARA (gain) / loss (9.4) 41.3 EBITS 510.3 512.6 EBITDAS
Slide 34: Definitions
Definitions Term Definition Cash conversion Net operating cash flows before financing costs, tax and material items divided by EBITDAS COO Country of origin CODB Cost of doing business. Gross profit less EBITS. Excludes non-cash items as well as tax, the cost of the Group’s capital structure and non
Slide 35: Disclaimer
Disclaimer Summary information The material in this presentation is summary information about Treasury Wine Estates Limited (TWE) and its subsidiaries and their activities, current as at the date of this presentation unless otherwise stated. It should be read in conjunction with TWE’s other announce