Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — H1 2014 Earnings Presentation
27 slides from Treasury Wine Estates's earnings presentation, Feb 20, 2014
Slide 1: Treasury Wine Estates Half Year Results
For personal use only TREASURY WINE ESTATES HALF YEAR RESULTS 20 February
Slide 2: Warwick Every-Burns, Chief Executive Officer
For personal use only Warwick Every-Burns Chief Executive Officer
Slide 3: Result headlines
Result headlines1 For personal use only • Statutory net profit after tax $106.2m, including $80.5m tax benefit • EBITS2,3 $45.8m, significantly below prior year reflects increased investment in marketing and distribution, challenging conditions in Asia and a number of factors in Australia • US distr
Slide 4: Tony Reeves, Chief Financial Officer
For personal use only Tony Reeves Chief Financial Officer
Slide 5: Profit & Loss
Profit & Loss Reported Currency Constant Currency For personal use only $Am (unless otherwise stated) 1H14 1H13 Change 1H13 Change Volume (m 9L cases) 15.3 16.5 (7.5)% 16.5 (7.5)% Net sales revenue 811.9 816.9 (0.6)% 878.5 (7.6)% Other revenue 52.3 33.8 54.7 % 36.4 43.7 % Cost of goods sold (624.5)
Slide 6: Cost update
Cost update For personal use only Cost of doing business margin1 • Cost of doing business margin increased 3.2ppts to 3.2ppts 23.9% principally reflecting: increase in cost of doing business – higher A&P investment as flagged at F13 result margin – increased overheads driven by a large vacancy rate
Slide 7: Other items included in NPAT
Other items included in NPAT For personal use only Tax benefit Significant other P&L items • Income tax benefit disclosed in TWE’s accounts for 31 There were a number of other items included within the December 2013 was $70.6m. Income tax benefit was P&L, principally relating to: largely attributabl
Slide 8: Cash Flow
Cash Flow For personal use only A$m (unless otherwise stated) 1H14 1H13 Improved cash conversion EBITDAS 88.4 109.9 • Net debt increased $92.6m to $303.5m principally Change in working capital (66.4) (103.2) reflects cash flow impact of increased non-current Other items (0.1) (2.7) Net operating cas
Slide 9: Capital expenditure
Capital expenditure For personal use only A$m 1H14 1H13 Continued investment for growth IT spend 6.6 11.8 • TWE invests for future growth; total capital and Vineyard developments 8.6 4.3 investment expenditure of $45.8m Oak purchases 0.9 3.8 Penfolds luxury fermenters 4.2 2.5 • Total capital expendi
Slide 10: Balance Sheet
Balance Sheet For personal use only A$m 1H14 F13 1H13 Strong balance sheet maintained • Higher assets driven by: Cash & cash equivalents 30.0 10.8 21.9 Receivables 456.1 460.9 521.8 – Investment in production of Luxury and Current inventories 706.1 714.5 702.6 Masstige wine from the 2013 Californian
Slide 11: Capital structure and debt profile
Capital structure and debt profile For personal use only Strong balance sheet position • Inaugural issuance of US$250m in US Private Placement (USPP) market diversifies sources of debt funding and increases the average duration of debt • Proceeds used for repayment and cancellation of the $200m synd
Slide 12: Inventory analysis
Inventory analysis For personal use only Inventory at book value split by segment – 1H14 and 1H13 33% increase in non-current inventory on the previous corresponding period $702.6 $706.1 $375.8 $498.0 $1,078.4 $1,204.1 • Strong 2013 Californian vintage enabled TWE to Total Luxury continue to build n
Slide 13: Foreign currency impact & risk management
Foreign currency impact & risk management Foreign exchange risk management For personal use only • Negative movement of $7.0m in 1H14 predominately relates to intrinsic value recognised directly in equity • Adoption of the AASB 9 hedge accounting standard (that enables time value to be deferred in e
Slide 14: Warwick Every-Burns, Chief Executive Officer
For personal use only Warwick Every-Burns Chief Executive Officer
Slide 15: ANZ – Challenges in 1H14
ANZ – Challenges in1H14 A$m 1H14 1H13 % 1H13 % • Disappointing EBITS impacted by a number of factors For personal use only Reported currency Constant currency • Lower volume reflects: Volume (m 9L cases) 4.2 4.4 (4.5)% 4.4 (4.5)% – impact of a change in depth of promotional NSR (A$m) 277.6 288.6 (3.
Slide 16: Asia – Challenging market conditions
Asia – Challenging market conditions For personal use only A$m 1H14 1H13 % 1H13 % • Significant EBITS decline in 1H14, down $8.4m to Reported currency Constant currency $4.9m on a constant currency basis Volume (m 9L cases) 0.5 0.6 (17.6)% 0.6 (17.6)% • Lower volume principally reflects austerity NS
Slide 17: Americas – Some positive signs emerging
Americas – Some positive signs emerging • EBITS down 46.2% to $24.6m principally impacted by For personal use only A$m 1H14 1H13 % 1H13 % lower shipments and increased COGS. Lower Reported currency Constant currency shipments largely due to inventory realignment in US Shipments (m 9L cases) 7.1 8.1
Slide 18: US distributor inventory realignment – update
US distributor inventory realignment – update For personal use only Est. cost @ 30 Action June 2013 FX # of cases Progress as at 1H14 / comments rates 1. Reduction in shipments Up to 1.5m less Action on track, shipments down 1m on prior period Up to $30.0m (EBITS) than depleted Shipped 450k less tha
Slide 19: EMEA – Brand health and strong market execution
EMEA – Brand health and strong market execution For personal use only A$m 1H14 1H13 % 1H13 % • Lower EBITS reflect volume growth and favourable mix, offset by increased brand building investment Reported currency Constant currency and adverse COGS Volume (m 9L cases) 3.5 3.4 2.9% 3.4 2.9% • Against
Slide 20: 2H14 Outlook
2H14 Outlook • Long term fundamentals of the global wine industry remain positive For personal use only • TWE will continue to invest in its iconic brand portfolio, distribution channels and the supply of Masstige and Luxury wine • In light of the challenging first half, F14 EBITS expected to be the
Slide 21: Questions
For personal use only Questions
Slide 22: Disclaimer
Disclaimer For personal use only 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 w
Slide 23: Supplementary Information
For personal use only Supplementary Information
Slide 24: Segment Information
Segment Information For personal use only Reported currency Constant currency A$m 1H14 1H13 Change 1H13 Change ANZ Volume1 4,240.9 4,441.3 (4.5)% 4,441.3 (4.5)% ANZ NSR 277.6 288.6 (3.8)% 291.8 (4.9)% ANZ EBITS 24.4 36.0 (32.2)% 34.9 (30.1)% Americas Shipments1 7,067.5 8,096.8 (12.7)% 8,096.8 (12.7)
Slide 25: Foreign currency impact on 1H13
Foreign currency impact on 1H13 For personal use only EBITS Impact of FX (translation and transaction) on 1H13 Primary Translation Transaction EBITS A$m Currencies Impact impact Americas result benefited by depreciation of AUD/USD but partially offset by lower Americas USD, CAD 4.6 7.0 11.6 USD/CAD
Slide 26: Reconciliation to statutory statement of cashflows
Reconciliation to statutory statement of cashflows For personal use only Reconciliation to Statement of Cashflows 1H14 1H13 Net operating cash flows before financing costs, 21.9 4.0 tax and material items Net interest paid (9.3) (4.7) Tax paid (7.1) (8.0) Net operating cash flows before net capital
Slide 27: Definitions
Definitions For personal use only 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
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