Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — H1 FY2019 Earnings Presentation
27 slides from Treasury Wine Estates's earnings presentation, Feb 14, 2019
Slide 1: Interim 2019 Results
TREASURY WINE ESTATES Interim 2019 Results 14 February 2019
Slide 2: Michael Clarke, Chief Executive Officer
Michael Clarke Chief Executive Officer 2
Slide 3: Executive Leadership Team on the call today
Executive Leadership Team on the call today Michael Clarke Chief Executive Officer Matt Young Chief Financial Officer Tim Ford Chief Operating Officer Joining Q&A session Victoria Snyder President, Americas Peter Dixon Managing Director, Asia Angus McPherson Managing Director, ANZ and Europe 3 3
Slide 4: Result headlines
Result headlines1,2,3 • NSR up 16% to $1,507.7m; constant currency increase of 13% represents the largest organic growth rate in company history4 • 1H19 EBITS up 19% to $338.3m with strong growth delivered by all regions; immaterial currency benefit, one-off costs taken above the line • Group EBITS
Slide 5: China Operating Model
China Operating Model An efficient route-to-market driving value for TWE, its customers and the consumer TWE Most Competitors1 Margin up to 25%2 Négociant3 Margin up to 60%2 National Distributor Wholesaler (including SOE’s4) Retailer / E-Commerce On-Premise End Consumer 1. Indicative only, based on
Slide 6: China Operating Model
China Operating Model TWE’s ambition is to expand city distribution coverage by 50%+ in the next three years with increased allocations of Luxury wine TWE’s current geographic footprint TWE’s targeted geographic footprint Distribution coverage High Med Our goal is to be as close to customers and con
Slide 7: US Operating Model
US Operating Model Transformational route-to-market changes progressing well ✓ Positive, collaborative relationships being formed with new distribution and retail chain partners; existing distributors continuing to perform well ✓ Dedicated sales and merchandising teams are in place and driving impro
Slide 8: Matt Young, Chief Financial Officer
Matt Young Chief Financial Officer 8
Slide 9: Financial Headlines
Financial Headlines • Global Luxury wines allocated 55% - 60% to 1H18 ahead of US route-to-market transition announcement; F19 allocation more evenly balanced between 1H and 2H • Change in strategy for Rawson’s Retreat in Asia in F18; volumes more evenly phased across the year in F19 • Timing of shi
Slide 10: 1H19 result; key measures of performance
1H19 result; key measures of performance1,2 Outstanding execution driving top-line accretion EBITS per dollar of CODB up every year 1,700 90 80.64 1.20 1.11 1.08 1,600 80 68.38 69.08 70.26 1,508 1,500 70 1.00 58.70 1,400 60 0.83 1,295 1,295 0.80 1,300 50 1,200 40 0.56 0.60 1,100 1,079 30 1,000 20 0.
Slide 11: Balance Sheet
Balance Sheet1,2 A$m 1H19 F18 1H18 Flexible and efficient balance sheet to support growth Cash & cash equivalents 183.0 89.4 202.5 • Net assets increased $121.3m on a reported currency basis; Receivables 829.1 593.3 662.1 adjusting for the movement in foreign currency, net assets Current inventories
Slide 12: Cash flow and net debt
Cash flow and net debt1,2 Cash flow reflects investment and growth Investing to drive premiumisation and operational efficiency A$m (unless otherwise stated) 1H19 1H18 A$m 1H19 1H18 EBITDAS 388.3 330.8 IT spend 7.1 7.6 Change in working capital (188.5) (44.6) Other items 8.0 (10.8) Oak purchases 15.
Slide 13: Inventory analysis
Inventory analysis Inventory at book value split by segment1,2 Inventory composition continues to reflect premiumisation; supporting earnings and margin growth in F20 and beyond • Total inventory increased $291.5m to $2,005.2m, reflecting: − $250.6m increase in non-current inventory − $40.9m increas
Slide 14: Capital Management
Capital Management Disciplined capital management delivering sustainable returns Strengthened financing structure enhances flexibility Investment grade credit metrics maintained: Optimised debt financing profile resulting in improved mix, spread and tenor of committed debt facilities, including: • L
Slide 15: Tim Ford, Chief Operating Officer
Tim Ford Chief Operating Officer 15
Slide 16: Americas
Americas Transformational route-to-market changes embedded, expanding availability and distribution the priority Americas regional performance Business headlines A$m 1H19 1H18 % 1H18 % ▪ US route-to-market changes are on-track and progressing well: Reported currency Constant currency - California an
Slide 17: Asia
Asia Business model, richer portfolio mix and outstanding sales execution driving top-line and earnings growth Asia regional performance Business headlines A$m 1H19 1H18 % 1H18 % ▪ Top-line and earnings growth driven by increased availability of Reported currency Constant currency Luxury and Masstig
Slide 18: Europe
Europe Continuing to deliver solid returns through top-line growth and disciplined cost management Europe regional performance Business headlines A$m 1H19 1H18 % 1H18 % ▪ NSR growth reflects strong trading performance across all key Reported currency Constant currency regional markets alongside Mass
Slide 19: Australia & New Zealand
Australia & New Zealand Strong customer partnerships and Masstige-led premiumisation delivering growth Australia & New Zealand regional performance Business headlines A$m 1H19 1H18 % 1H18 % ▪ NSR in line with the pcp, reflecting: Reported currency Constant currency - Strong volume growth in Australi
Slide 20: Michael Clarke | Summary & Outlook
Michael Clarke | Summary & Outlook 20
Slide 21: Summary and outlook
Summary and outlook • TWE has the people, the brands and the business models to maintain its competitive advantage in all its markets and continue to drive strong global momentum • US route-to-market changes are progressing well and on-track • The prospects for growth in Asia remain highly attractiv
Slide 22: Questions
Questions 22
Slide 23: Supplementary Information
Supplementary Information 23
Slide 24: Volume
Volume A$m 1H19 1H18 % (Volume, m 9Le) ANZ 4.3 4.3 0.5% Asia 2.4 2.4 1.6% Americas 7.5 7.3 1.9% Europe 4.5 4.4 1.3% TWE 18.7 18.4 1.4% Commentary • ANZ: Australia volume increase of 3.8% driven by Masstige portfolio growth, partly offset by volume decline in New Zealand due to the transitional impac
Slide 25: Impact of foreign exchange rate movements & hedging
Impact of foreign exchange rate movements & hedging 1H19 constant currency impact 2H19 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 15.4 (3.0) 12.4 AUD/USD COGS, EBITS +1%
Slide 26: Definitions
Definitions Term Definition CODB Cost of doing business COGS Cost of goods sold Throughout this presentation, constant currency assumes current and prior period earnings of foreign operations are Constant currency translated and cross border transactions are transacted at current year exchange rates
Slide 27: 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
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