Slide 1: Treasury Wine Estates Annual Results
TREASURY WINE ESTATES ANNUAL RESULTS 17 AUGUST
Slide 2: David Dearie, Chief Executive Officer
David Dearie Chief Executive Officer
Slide 3: Wine category
Wine category • Fundamentals of the wine category remain strong • Consumer demand continues to grow in key markets, particularly at higher price points • Global supply heading towards balance • Vintage 2011 in Australia and California negatively impacted by weather, resulting in reduced availability
Slide 4: Result headlines
Result headlines • EBITS $210.2 million1, representing growth of 7.7% on a reported basis and 18.6% on a constant currency basis • EBITS margin up 2.3pts to 12.8% • Net sales revenue (NSR) per case up 1.6% • 2012 Australian vintage and strategy to increase production of luxury wine drives strong inc
Slide 5: Full year progress towards our Financial Ambition
Full year progress towards our Financial Ambition FY12 Pro forma FY11 Volume growth in the markets & sectors where we 0.3% ex-UK1 (6.6)% compete NSR2 growth ahead of volume growth as we (0.8)% ex-UK1 (0.5)% benefit from mix, premiumisation and pricing NSR2 per case growth 1.6% 6.5% EBITS2 growth ahe
Slide 6: Mark Fleming, Chief Financial Officer
Mark Fleming Chief Financial Officer
Slide 7: Profit & Loss
Profit & Loss Reported Currency Constant Currency Proforma Proforma $Am (unless otherwise stated) FY12 Change Change FY11 FY11 Volume (m 9L cases) 31.8 33.2 (4.4)% 33.2 (4.4)% Net sales revenue 1,640.8 1,737.5 (5.6)% 1,689.5 (2.9)% EBITS 210.2 195.2 7.7 % 177.3 18.6 % EBITS margin (%) 12.8% 11.2% 1.
Slide 8: Material Items
Material Items • Restructuring and redundancy costs consist of redundancy payments and related program costs • IT-related material items: – Settlement of $31.5 million cash received from SAB Miller in April 2012 – Following review, $35.9m IT assets written-off and $20.4 million in IT operating expen
Slide 9: Cost Improvement Update
Cost Improvement Update Cost of doing business / NSR1 In excess of $30 million of savings achieved 134bps • Initial phase of cost reduction program now complete: improvement in cost of doing business margin – FY12 cost of doing business margin reduced 1.34% of NSR (c.$22 million) in FY12, driven by:
Slide 10: Balance Sheet
Balance Sheet Strong and flexible balance sheet A$m FY12 FY11 • Strong balance sheet provides operational and Cash & cash equivalents 28.6 64.8 financial flexibility to pursue growth opportunities Receivables 447.6 452.6 • Improvement in cash and working capital Current inventories 711.5 768.5 manag
Slide 11: Working Capital Management
Working Capital Management Working capital days1,2 Benefits of renewed focus on working capital • Renewed focus on working capital (excluding 236 days 220 days non-current inventory) results in an improvement of 24 days 41 days 81 days Non-current inventory days 179 days Working capital 155 days day
Slide 12: Inventory analysis
Inventory analysis Inventory at book value split by segment – FY12 • TWE has adopted a strategy to produce more Luxury & Masstige wine (“Project Uplift”) – Primarily red wine from premium appellations – 2 to 5 years between vintage and wine release Total Luxury / Masstige – Enables TWE to take advan
Slide 13: Cash Flow
Cash Flow A$m (unless otherwise stated) FY12 Proforma Strong cash flow generation continues FY11 • Change in working capital reflects increased EBITS 210.2 195.2 Depreciation & amortisation 67.7 71.8 investment in non-current inventory EBITDAS 277.9 267.0 Change in working capital (9.8) 9.5 • Capita
Slide 14: Foreign Currency Impact & Risk Management
Foreign Currency Impact & Risk Management Impact of FX on FY12 EBITS Primary Currencies A$m Small impact reported in the Americas with AUD appreciation v. USD Americas USD, CAD (2.6) being largely offset by CAD / USD exposures and timing of cashflows GBP, EUR, NOK, EMEA (18.1) EMEA result impacted b
Slide 15: David Dearie, Chief Executive Officer
David Dearie Chief Executive Officer
Slide 16: Americas – Progress report
Americas – Progress report A$m 2012 2011 Change • Good momentum in depletions / consumption Constant currency – FY12 US depletions down 1.9% Volume (m 9L cases) 15.7 15.9 (1.7)% – 2H12 US depletions up 2.3% Depletions 15.4 15.7 (1.9)% NSR (A$m) 707.5 743.3 (4.8)% – 4Q12 US depletions up 5.0% NSR per
Slide 17: EMEA – Premiumising and profitable
EMEA – Premiumising and profitable A$m 2012 2011 Change • Volume down 18.7% as we exit unprofitable sales Constant currency • NSR per case driven by price increases and Volume (m 9L cases) 6.9 8.5 (18.7)% favourable mix NSR (A$m) 253.0 285.5 (11.4)% • Focus on switching towards more premium price NS
Slide 18: ANZ – Continued growth in tough retail environment
ANZ – Continued growth in tough retail environment A$m 2012 2011 Change • Volume growth slightly ahead of market, with 2H12 Constant currency growth achieved across all channels Volume (m 9L cases) 8.0 7.8 2.6% • Lower NSR per case as a result of reduced Luxury & NSR (A$m) 574.1 578.7 (0.8)% Masstig
Slide 19: Asia – Continued growth driven by superior execution
Asia – Continued growth driven by superior execution A$m 2012 2011 Change • Volume growth driven by increased allocation of Luxury Constant currency & Masstige Volume (m 9L cases) 1.2 1.0 20.6% • Collectively Hong Kong and China volume up 31% NSR (A$m) 106.2 82.0 29.5% • NSR up 29.5% NSR per case (A
Slide 20: Beringer BBU – Trusted brands with innovation
Beringer BBU – Trusted brands with innovation • Beringer Luxury & Masstige portfolio depletions up by 23% in FY12 • Growth in Luxury & Masstige driven by: – Chateau St Jean depletions up 16%, Knights Valley depletions up 42%, Stags’ Leap depletions up 20% and Gabbiano depletions up 15% • Supply cons
Slide 21: Rosemount BBU – Refreshed and positioned for growth
Rosemount BBU – Refreshed and positioned for growth • Rosemount “refresh” launched in March in ANZ; depletions up 14.4% since launch • FY13 global rollout of new Rosemount packaging, blends and packaging formats • Rosemount the number one selling $8-$10 Australian wine in the USA1 • Rosemount was th
Slide 22: Wolf Blass BBU – Premiumisation
Wolf Blass BBU – Premiumisation Wolf Blass • New packaging and creative launched globally • Wolf Blass showing strong brand health and premiumising – Growth in ANZ, up 4.3% – Growth in Asia, up 26.1% – Growth in 2H12 in Canada, up 9.5% • Exited unprofitable UK business resulting in volume decline of
Slide 23: Lindeman’s BBU – Strong brand health
Lindeman’s BBU – Strong brand health • Multi-dimensional and multi-country brand • Positive NSR per case growth in Lindeman’s brands across Commercial, Masstige and Luxury segments in FY12 • Lindeman’s is Australia’s leading “lighter in alcohol” wine brand with 48% market share1 • FY13 launch of “li
Slide 24: Penfolds BBU – Global icon
Penfolds BBU – Global icon • Price and regional allocation compensated for lower vintage release • Chief Winemaker Peter Gago, named “Winemaker’s Winemaker” in 2012 • Volume of Masstige wine constrained in FY13, driven by weather effected 2011 vintage • Increased allocations to Asia and emerging mar
Slide 25: FY12 result summary
FY12 result summary • Overall, a solid full year result, demonstrating the benefits of new global structure where importance is placed on regions, brands and supply • Achieved EBITS growth of 18.6% on a constant currency basis, 7.7% on a reported currency basis • Improved EBITS margin and NSR per ca
Slide 26: Outlook
Outlook • Building TWE’s portfolio of world class brands remains a top priority • Long term fundamentals of the global wine industry remain positive • FY13 expected to be impacted by lower supply of premium wine and higher associated COGS, increased IT operating and amortisation costs and strategy t
Slide 27: Questions
Questions
Slide 28: Disclaimer and Important Notice
Disclaimer Treasury Wine Estates (TWE) advises that this presentation contains forward looking statements which may be subject to significant uncertainties outside of TWE’s control. No representation is made as to the accuracy or reliability of forecasts or the assumptions on which they are based. A
Slide 29: Supplementary Information
Supplementary Information
Slide 30: Brand Business Units
Brand Business Units • Beringer • US brands: Cellar No. 8 / Chateau St. Jean / Emma Pearl / Etude / Greg Norman Estates / Meridian / Santa Barbara Collection / Sbragia Family Vineyards / Sledgehammer / Souverain / St. Clement / Stags’ Leap / Be. • Other brands: Castello di Gabbiano / Colores del Sol
Slide 31: Segment Information
Segment Information Reported currency Constant currency Pro forma Pro forma A$m FY12 Change Change FY11 FY11 1 ANZ Volume 8.0 7.8 2.6% 7.8 2.6% ANZ NSR 574.1 577.9 (0.7)% 578.7 (0.8)% ANZ EBITS 109.0 96.3 13.2% 97.3 12.0% 1 Americas Volume 15.7 15.9 (1.7)% 15.9 (1.7)% Americas NSR 707.5 773.9 (8.6)%
Slide 32: Segment Information
Segment Information Reported currency Constant currency Pro forma A$m 1H 12 Change 1H11 Change 1H 11 1 ANZ Volume 4.5 4.4 1.7% 4.4 1.7% ANZ NSR ($m) 297.4 297.6 (0.1)% 297.5 0.0% ANZ EBITS ($m) 48.5 44.7 8.5% 45.2 7.3% 1 Americas Volume 8.2 8.3 (1.5)% 8.3 (1.5)% Americas NSR ($m) 375.1 415.3 (9.7)%
Slide 33: Segment Information
Segment Information Reported currency Constant currency Pro forma A$m 2H 12 Change 2H11 Change 2H 11 1 ANZ Volume 3.6 3.4 3.7% 3.4 3.7% ANZ NSR ($m) 276.7 280.3 (1.3)% 281.2 (1.6)% ANZ EBITS ($m) 60.5 51.6 17.2% 52.1 16.1% 1 Americas Volume 7.4 7.6 (2.0)% 7.6 (2.0)% Americas NSR ($m) 332.4 358.6 (7.
Slide 34: Definitions
Definitions Term Definition Throughout this presentation, constant currency assumes current and prior period earnings of Constant currency foreign operations are translated and cross border transactions are transacted at current year exchange rates. NSR Net sales revenue EBITDAS Earnings before inte