Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — 1H21 Earnings Presentation
40 slides from Treasury Wine Estates's earnings presentation, Feb 17, 2021
Slide 1: 2021 Interim Results Investor and Analyst Presentation
17 February 2021 ASX ANNOUNCEMENT 2021 Interim 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 Ltd (ASX:TWE) commencing at 11:00am (AEDT) on 17 February 2021. Links to reg
Slide 2: F21 Half Year Results
F21 HALF YEAR RESULTS oe WINE ESTATES 17 February 2021
Slide 3: Tim Ford Chief Executive Officer
Tim Ford Chief Executive Officer P A G E 2
Slide 4: Our team presenting today
Our team presenting today Tim Ford Ben Dollard Managing Director and Chief President, Americas Executive Officer Matt Young Peter Neilson Chief Financial Officer Managing Director, Australia & New Zealand Tom King Michelle Brampton Managing Director, Asia Managing Director, EMEA P A G E 3
Slide 5: Agenda
Agenda 1H21 Financial Highlights Tim Ford Update on Strategic Agenda Tim Ford Financial Performance Matt Young Regional Performance Tom King, Ben Dollard Peter Neilson, Michelle Brampton Summary & Outlook Tim Ford Q&A All P A G E 4
Slide 6: 1H21 Financial Highlights
1H21 Financial Highlights1,2,3,4 Execution of plan driving positive momentum; strong and flexible balance sheet retained NSR EBITS NPAT $1.4bn (8.2)% $284.1m (22.5)% $175.3m (23.5)% NSR per case EBITS margin EPS $82.5 (5.2)% 20.1% (3.8)ppts 24.3cps (23.8)% Cash conversion ROCE Luxury and masstige 12
Slide 7: Earnings performance
Earnings performance Strong execution of the COVID-19 Plan Ahead Agenda has driven positive momentum towards recovery in all regions A$m P A G E 6
Slide 8: Status of key sales channels
Status of key sales channels Our key sales channels remain in varied states of impact and recovery Indicative NSR Asia Americas ANZ EMEA contribution1 and 1H21 channel status by region % NSR Status % NSR Status % NSR Status % NSR Status Bricks & Mortar 23% 73% 71% 89% Retail Legend 53% Not Not Not G
Slide 9: Tim Ford Chief Executive Officer
Tim Ford Chief Operating Officer Tim Ford Chief Executive Officer P A G E 8
Slide 10: Executing the Game Plan – our F21 priorities
Executing the Game Plan – our F21 priorities Delivering on our priorities to support our through the cycle growth ambitions 01 02 03 Manage performance Shift to a consumer Optimise our global led marketing model supply chain 04 05 06 Accelerate separate Deliver the future state China measures: focus
Slide 11: Accelerate separate focus across the portfolio
Accelerate separate focus across the portfolio 04 Brand led divisional model to drive increased focus and unlock our growth potential Icons & Bins Supply Operations US Supply Treasury Business Solutions Corporate P A G E 1 0
Slide 12: Accelerate separate focus across the portfolio
Accelerate separate focus across the portfolio 04 Each division has unique characteristics with distinct opportunities for growth Divisional Tom King Peter Neilson Ben Dollard Lead Deliver consumer centric The world’s pre-eminent and innovative offerings Lead the premium wine Vision luxury wine bran
Slide 13: Delivering a future state premium US wine business
Delivering a future state premium US wine business 05 Progressing key US business restructuring initiatives; on track for completion by 1H22 #1 #2 #3 Adjust operating model and Divestiture of brands and assets Restructuring of supply chain to organisation structure reduce COGS Re-designed sales and
Slide 14: China measures: implement global response plan
China measures: implement global response plan 06 TWE’s global response plan is in progress, with financial benefits to commence from 2H21 Financial Focus Initiative benefits starting Drive incremental Reallocation of Penfolds Bins & Icon range growth across Completed assessment of markets for reall
Slide 15: Matt Young Chief Financial Officer
Matt Young Chief Financial Officer P A G E 1 4
Slide 16: 1H21 result; key measures of performance
1H21 result; key measures of performance1,2 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. Numbers subject to rounding 2. Prior year comparatives have been restated for the application of AASB16 Leases and
Slide 17: Material items
Material items Benefits Expected Recognised Material Items (pre-tax) Benefits 1H21 from one-off cost to Date Enable prioritisation of premium focus brand Divestment of US brands and assets portfolio as driver of F21 $(100.0)m ($50.7)m $(50.7)m Americas regional performance South Australian luxury ex
Slide 18: Balance Sheet
Balance Sheet1,2,3 A$m 1H21 F20 1H20 Flexible and efficient balance sheet retained Cash & cash equivalents 480.8 449.1 335.6 • Net assets decreased $63.5m on a reported currency basis in Receivables 511.5 554.1 702.8 1H21. Adjusting for movements in foreign exchange rates, Current inventories 826.7
Slide 19: Inventory analysis
Inventory analysis Inventory at book value split by segment1,2 • Total inventory volume declined 16% versus the pcp, driven by lower 2020 vintages in Australia and California • Total inventory value declined $143.4m, or 7%, to $1,868.5m; excluding the impact of the higher Australian dollar, total To
Slide 20: Cash flow and net debt
Cash flow and net debt1 A$m (unless otherwise stated) 1H21 1H20 Strong operating cash flow, includes impacts from smaller EBITDAS 362.8 444.7 Californian vintage and earlier sales phasing in Asia Change in working capital 85.2 (73.8) Other items 19.7 7.4 Net operating cash flows before financing cos
Slide 21: Capital Expenditure
Capital Expenditure A$m 1H21 1H20 Capital investment reflects prudent management of IT spend 3.7 8.4 capital allocation priorities through the pandemic Oak purchases 2.1 5.1 Vineyard redevelopments 11.0 17.2 • Capital expenditure (capex) $68.4m in 1H21, comprising: Upgrades to wine making equipment
Slide 22: Capital Management
Capital Management TWE’s flexible and efficient capital structure remains a key strength • Investment grade credit metrics maintained: - Net debt to EBITDAS1 1.7x, in line with the prior year; Interest cover 9.0x - For financial covenant compliance, which excludes the capitalisation of leases, Net d
Slide 23: Regional Managing Directors
Tom King Managing Director Asia Ben Dollard President Americas Peter Neilson Managing Director ANZ Michelle Brampton Managing Director EMEA P A G E 2 2
Slide 24: Asia
Asia Positive momentum across the region, with re-opening of luxury channels driving top-line performance Asia regional performance Business headlines $Am 1H21 1H20 % 1H20 % • EBITS declined 28.6% and EBITS margin declined 5.6ppts to 38.2%: Reported Currency Constant Currency − Volume and NSR declin
Slide 25: Asia Brand Highlights
Asia Brand Highlights Bold, Consumer Driven Driving More Consumption Focused Portfolio Of Brands Innovation Occasions Clear & Differentiated Roles Penfolds & Shang Xia Launch in Wolf Blass Wok-Off in Singapore, Penfolds Meet Extraordinary with Greater China Malaysia & Indonesia Bin 389 in Singapore
Slide 26: Americas
Americas Consumer-led innovation driving continued outperformance of the focus premium brand portfolio Americas regional performance Business headlines $Am 1H21 1H20 % 1H20 % • EBITS declined 2.7% and EBITS margin improved 0.7ppts to 15.5%, Reported Currency Constant Currency reflecting: − Volume an
Slide 27: Americas Brand Highlights
Americas Brand Highlights Bold, Consumer Driven Consumer Led & Experience Focused Portfolio Of Brands Innovation Focused Marketing Clear & Differentiated Roles 19 Crimes Cali Red Snoop Dogg Beringer Bros CMA Partnership Driving Luxury with the Penfolds Partnership & Kelsea Ballerini Music Video Cali
Slide 28: Australia & New Zealand
Australia & New Zealand Growing the masstige portfolio, led by the performance of key focus brands ANZ regional performance Business headlines $Am 1H21 1H20 % 1H20 % • EBITS declined 16.0% and EBITS margin fell 4.2ppts to 23.3%, Reported Currency Constant Currency reflecting: − Volume and NSR declin
Slide 29: ANZ Brand Highlights
ANZ Brand Highlights Consumer Led & Experience Driving More Consumption Focused Portfolio Of Brands Focused Marketing Occasions Clear & Differentiated Roles Squealing Pig activated across Pepperjack portfolio expansion into 19 Crimes driving category growth media & retail channels growth varietals t
Slide 30: Europe, Middle East & Africa
Europe, Middle East & Africa Focus brand portfolio, led by 19 Crimes, driving top-line growth; higher costs impacting in the short-term EMEA regional performance Business headlines $Am 1H21 1H20 % 1H20 % • EBITS declined 26.5% and EBITS margin fell 6.5ppts to 11.5%, with strong top-line performance
Slide 31: EMEA brand highlights
EMEA brand highlights Consumer Led & Experience Driving More Consumption Focused Portfolio Of Brands Focused Marketing Occasions Clear & Differentiated Roles Accelerating 19 Crimes with highly Blossom Hill Gin Fizz successfully Driving Lindeman’s differentiation by engaging Halloween campaign blurs
Slide 32: Tim Ford Chief Executive Officer
Tim Ford Chief Executive Officer P A G E 3 1
Slide 33: Summary and outlook
Summary and outlook • 1H21 performance reflects strong execution of our COVID-19 Plan Ahead Agenda, which has driven positive trends towards recovery in all regions • For 2H21, we are planning for the continuation of conditions consistent with recent trading across our key markets outside of China,
Slide 34: 2021 Investor Day
2021 Investor Day Treasury Wine Estates will host an Investor Day on the 13th of May 2021 at the Hilton in Sydney “TWE 2025: Boldly leading change in the world of wine” For further information on Treasury Wine Estates, please refer to our 2020 Fact Book, which is available via the following link: TW
Slide 35: P A G E 3 4
P A G E 3 4
Slide 36: P A G E 3 5
P A G E 3 5
Slide 37: Volume
Volume (Volume, m 9Le) 1H21 1H20 % Americas 6.6 7.0 (4.6)% Asia 1.3 2.0 (34.6)% EMEA 5.2 4.6 12.8% ANZ 3.9 4.1 (3.5)% TWE Volume 17.0 17.7 (3.2)% • Americas: Lower volume in the Americas driven by a 12.7% decline in commercial volumes, as well as a reduction in volumes for higher margin luxury wine
Slide 38: Impact of foreign exchange rate movements & hedging
Impact of foreign exchange rate movements & hedging 1H21 constant currency impact 2H21 EBITS sensitivity and risk management CFX Impact (A$m) Currency Primary EBITS Movement Currency Underlying Hedging1 Total Pair Exposure Sensitivity (A$m) AUD/USD and AUD/GBP (17.5) 4.6 (12.9) AUD/USD COGS, EBITS +
Slide 39: Definitions
Definitions Term Definition Constant currency Throughout this presentation, constant currency assumes current and prior period earnings of foreign operations are translated and cross border transactions are transacted at current year exchange rates CODB Cost of doing business. Gross profit less EBIT
Slide 40: 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