Slide 1: Treasury Wine Estates Half Year Results
For personal use only TREASURY WINE ESTATES HALF YEAR RESULTS 27 February
Slide 2: Michael Clarke, Chief Executive Officer
For personal use only Michael Clarke Chief Executive Officer
Slide 3: Result headlines
Result headlines1,2 For personal use only • Net sales revenue (NSR) up 8.7% on a reported currency basis and by 6.2% constant currency basis3, reflecting improved portfolio mix • On track to deliver 50% uplift in consumer marketing investment and $35 million overhead reduction program in F15 • EBITS
Slide 4: TWE's journey towards being the world's most celebrated wine company
TWE’s journey towards being the world’s most celebrated wine company For personal use only By transitioning from an order-taking, agricultural company to a global, brand-led marketing organisation • Challenge “cottage industry” mindset of winemaking: TWE can preserve the mystique and romance of wine
Slide 5: F15 re-set year; progress update
F15 re-set year; progress update For personal use only 1H15 achievements 2H15 plans • Seamlessly transitioned Penfolds release date to October • Accelerate separate focus on Luxury & Masstige versus • Significant step-up in consumer marketing Commercial portfolios globally – 1Q15: Investment in
Slide 6: Brand activation comes to life at TWE in 1H15
Brand activation comes to life at TWE in 1H15 October new vintage release Numbers Can Be Extraordinary Global launch at Penfolds For personal use only date House NYC Wynnsday new vintage release Commenced targeted support of Strong growth from Masstige Napa Estate brands innovations in the US 5
Slide 7: Tony Reeves, Chief Financial Officer
For personal use only Tony Reeves Chief Financial Officer
Slide 8: Profit & Loss
Profit & Loss Reported Currency Constant Currency For personal use only $Am (unless otherwise stated) 1H15 1H14 Change 1H14 Change Volume (m 9L cases) 15.1 15.3 (1.3)% 15.3 (1.3)% Net sales revenue 882.7 811.9 8.7 % 831.0 6.2 % Other Revenue 51.6 52.3 (1.3)% 53.5 (3.6)% Cost of goods sold (637.0) (6
Slide 9: Cost update
Cost update Cost of goods sold per case1 • Cost of goods sold (COGS) per case increased $0.38 For personal use only $0.38 per case on a constant currency basis reflecting: increase in 41.91 42.29 cost of goods per case – Improved portfolio mix in Luxury segment across all regions relative to the pri
Slide 10: US distributor inventory realignment
US distributor inventory realignment For personal use only Program on track to be completed in F15 Est. cost @ 30 Action June 2013 FX # of cases Progress as at 1H15 rates US Depletions 282k cases ahead of shipments in 1. Reduction in shipments Up to 1.5m less Up to $30.0m 1H15 (EBITS) than depleted
Slide 11: Cash Flow
Cash Flow A$m (unless otherwise stated) 1H15 1H14 Significantly improved cash conversion For personal use only EBITDAS 127.5 88.4 • Net debt increased $73.7m to $283.1m; $39.7m Change in working capital (29.5) (63.2) Other items 0.6 (0.1) related to lower period-end exchange rates used to Net operat
Slide 12: Capital expenditure
Capital expenditure For personal use only A$m 1H15 1H14 Continued investment in premiumisation IT spend 3.7 6.6 • TWE continues to invest in premiumisation and future Vineyard redevelopments 10.7 8.6 growth; with total capital expenditure of $34.3m Oak purchases 6.7 0.9 • Capital expenditure in the
Slide 13: Balance Sheet
Balance Sheet For personal use only A$m 1H15 FY14 1H14 Strong and flexible balance sheet maintained Cash & cash equivalents 35.1 52.0 30.0 • TWE maintains financial metrics consistent with an Receivables 473.4 414.9 456.1 investment grade credit profile with net debt / Current inventories 727.2 707.
Slide 14: Capital structure and debt profile
Capital structure and debt profile For personal use only Group debt maturity profile Robust capital structure and debt profile • $593.3m of committed undrawn syndicated debt facilities versus $525.8m in the previous corresponding period • Weighted average term to maturity of committed facilities 4.0
Slide 15: Inventory analysis
Inventory analysis For personal use only Inventory at book value split by segment – 1H15 and 1H14 Outstanding inventory composition maintained • Total inventory up $72.7m; $41.6m related to the depreciation of the AUD versus the USD Total Luxury at cost • Non-current inventory increased $51.6m relat
Slide 16: Foreign currency impact & risk management
Foreign currency impact & risk management Foreign exchange risk management For personal use only • Realised hedge losses of $2.8m in 1H15 ($1.9m EMEA and $0.9m Americas), included in COGS AUD / USD transactional exposures • 2H15 exposure 50% hedged at a weighted average rate of $0.92, fully particip
Slide 17: Michael Clarke, Chief Executive Officer
For personal use only Michael Clarke Chief Executive Officer
Slide 18: ANZ – Outstanding brand execution in challenging market
ANZ – Outstanding brand execution in challenging market A$m 1H15 1H14 % 1H14 % For personal use only • EBITS performance driven by favourable portfolio mix Reported currency Constant currency Reported currency and outstanding brand-led campaigns in a challenging Volume (m 9Le) 4.0 4.2 (5.3)% 4.2 (5.
Slide 19: Asia – Brand health and execution driving profit growth
Asia – Brand health and execution driving profit growth For personal use only A$m 1H15 1H14 % 1H14 % • EBITS rebound underpinned by brand health, robust Reported currency Constant currency Reported execution currency campaigns and successful of brand-led Volume (m 9Le) 0.5 0.5 9.7% 0.5 9.7% transiti
Slide 20: EMEA – Brand investment in challenging markets
EMEA – Brand investment in challenging markets For personal use only A$m 1H15 1H14 % 1H14 % • Significantly lower EBITS reported in EMEA Reported currency Constant currency Reported currency • Despite distribution gains and robust brand Volume (m 9Le) 3.2 3.5 (7.7)% 3.5 (7.7)% representation on shel
Slide 21: Americas – Executing portfolio premiumisation strategy
Americas – Executing portfolio premiumisation strategy • For personal use only A$m 1H15 1H14 % 1H14 % EBITS growth reflects brand health, portfolio Reported currency Constant currency premiumisation and shipments growth in USA and Reported currency Shipments (m 9Le) 7.3 7.1 3.4% 7.1 3.4% Canada 1 De
Slide 22: Summary
Summary • 1H15 EBITS of $85.2m was in line with company expectations; TWE remains on track to deliver plan in F15 For personal use only • Luxury & Masstige portfolio showing solid momentum in all regions • Continued challenges in Commercial segment in all major markets; intensified by proliferation
Slide 23: Questions
For personal use only Questions
Slide 24: Disclaimer
Disclaimer For personal use only Treasury Wine Estates (TWE) advises that this presentation contains forward looking statements which may be subject to significant uncertainties outside of TWE’s control. No representation is made as to the accuracy or reliability of forecasts or the assumptions on w
Slide 25: Supplementary Information
For personal use only Supplementary Information
Slide 26: Foreign currency impact on prior period EBITS
Foreign currency impact on prior period EBITS For personal use only Foreign exchange impacts on 1H14 EBITS(A$m) Primary Translation Transaction EBITS Impact Currencies Impact impact Americas result benefited from significant depreciation of AUD/USD (late in 1H15), USD Americas 3.0 (2.0) 1.0 partiall
Slide 27: Segment Information
Segment Information For personal use only Reported currency Constant currency A$m 1H15 1H14 Change 1H14 Change 1 ANZ Volume 4,017.5 4,240.9 (5.3)% 4,240.9 (5.3)% ANZ NSR 304.0 277.6 9.5% 278.5 9.2% ANZ EBITS 43.9 24.4 79.9% 23.8 84.5% 1 Americas Shipments 7,310.5 7,067.5 3.4% 7,067.5 3.4% Americas N
Slide 28: 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