Slide 1: 2022 Interim Results Investor and Analyst Presentation
16 February 2022 ASX ANNOUNCEMENT 2022 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 10:00am (AEDT) on 16 February 2022. Links to reg
Slide 2: F22 Half Year Results
F22 Half Year Results 16 FEBRUARY 2022
Slide 3: Introduction
Introduction Tim Ford Chief Executive Officer
Slide 4: 1H22 Financial Highlights
1H22 Financial Highlights 1,2,3,4,5 Reported EBITS down 7% in 1H22; up 28% excluding Australian COO sales to Mainland China NSR EBITS NPAT $1.3bn (10.1)% Reported $262.4m (6.7)% Reported $163.2m (5.3)% (3.8)% Organic6 (1.2)% Organic6 NSR per case EBITS margin EPS 20.7% 0.8 22.6cps (5.4)% $95.6 16.0%
Slide 5: 1H22 Divisional performance
1H22 Divisional performance Strong underlying earnings growth delivered across each of the brand portfolio divisions Treasury Treasury Penfolds Americas Treasury Americas Premium Brands Metric1 1H22 % 1H22 % % Organic2 1H22 % NSR (A$m) 382.7 (16.3)% 465.9 (7.7)% 13.6% 418.4 (6.3)% Excluding Mainland
Slide 6: Status of key sales channels
Status of key sales channels 1H22 performance delivered against a backdrop of varied and ongoing impacts from the pandemic Indicative 1H22 Asia Americas ANZ EMEA channel status by geography1 Status Status Status Status Legend Bricks & Mortar Retail Green Open, with minimal disruption or positive Not
Slide 7: Financial Performance
Financial Performance Matt Young Chief Financial Officer
Slide 8: Key measures of performance
Key measures of performance 1,2 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. All figures and calculations are subject to rounding 7 2. TWE has updated its accounting policies in relation to the treatment
Slide 9: Material items
Material items Expected one-off Total recognised Recognised in Material Items Benefits Benefits from costs to date 1H22 Enable prioritisation of Divestment of US brands & assets premium focus brand portfolio F21 $(100.0)m $(88.1)m $(25.8)m (announced 17 February 2021) as driver of Americas regional
Slide 10: Balance sheet
Balance sheet 1,2 A$m 1H22 F21 1H21 Cash & cash equivalents 616.6 448.1 480.8 • Net assets increased $69.3m on a reported currency 622.1 622.0 511.5 Receivables basis in 1H22 Current inventories 917.2 839.7 826.7 Non-current inventories 966.7 1,056.8 1,041.8 • Adjusting for the movement in foreign e
Slide 11: Inventory analysis
Inventory analysis Inventory at book value split by price segment1,2 $917.2m $826.7m $966.7m $1,041.8m $1,883.9m $1,868.5m • Total inventory volume declined 2% versus the pcp • Total inventory value was in line with the pcp: 30% − Excluding the impact of the weaker Australian dollar, total inventory
Slide 12: Supply Chain Update
Supply Chain Update Supply chain initiatives and market dynamics to support improved mix-adjusted COGS over time Global supply chain disruptions 2022 Australian vintage planning • Successful execution of supply chain • The Australian wine industry is managing management supported delivery of through
Slide 13: Cash flow and net debt
Cash flow and net debt1 A$m (unless otherwise stated) 1H22 1H21 EBITDAS 335.7 357.4 Change in working capital 52.9 85.2 Other items (2.1) 19.7 • Cash conversion of 115.1% delivered in 1H22, reflecting Net operating cash flows before financing costs, tax & material items 386.5 462.3 continued strong
Slide 14: Capital expenditure
Capital expenditure A$m 1H22 1H21 Vineyard redevelopments 11.2 11.0 • Capital expenditure (capex) $58.6m in 1H22, including: Wine making equipment and facilities 6.7 8.3 − Maintenance & replacement capex of $30.0m IT spend 4.2 3.7 − Growth capex of $28.6m, predominantly related to the investment in
Slide 15: Capital management
Capital management • TWE’s efficient and flexible investment grade capital structure remains a key business strength 1: - Net debt / EBITDAS 1.8x at 1H22 (1.7x at 1H21) inclusive of leases2 and 1.2x excluding leases (1.0x at 1H21) - Interest cover 13.5x at 1H22 (9.0x at 1H21) - TWE expects to mainta
Slide 16: Divisional Performance
Divisional Performance Tom King Managing Director, Penfolds Ben Dollard President, Treasury Americas Peter Neilson Managing Director, Treasury Premium Brands
Slide 17: Penfolds
Penfolds Building strong momentum across priority markets and channels, with EBITS ex-Mainland China up 32% Reported Currency Constant Currency Performance summary1 A$m 1H22 1H21 % 1H21 % • EBITS declined 17.4% and EBITS margin declined 0.6 Volume (m 9Le) 1.1 1.3 (15.8)% 1.3 (15.8)% ppts to 43.1%: N
Slide 18: Penfolds
Penfolds Progression against F22 strategic priorities Attract new consumers Grow global distribution and availability • Scaling Penfolds luxury status in 1H22 with key brand activations: • Strong growth in distribution, volume and NSR across priority markets and channels in 1H22 • Asia the standout,
Slide 19: Treasury Americas
Treasury Americas A reshaped business, with strong growth in 1H22 led by the Luxury portfolio Reported Currency Constant Currency Performance summary1 A$m 1H22 1H21 % 1H21 % Organic %2 • EBITS increased 26.9% and EBITS margin improved 5.0 Volume (m 9Le) 4.0 6.6 (39.0)% 6.6 (39.0)% (5.5)% ppts to 18.
Slide 20: Treasury Americas
Treasury Americas Progression against F22 strategic priorities Expand the Premium and Luxury portfolio Deliver asset portfolio and cost optimisation • Consumer-led brand innovation and investment continues to drive • Disciplined capital allocation is supporting the momentum across the Treasury Ameri
Slide 21: Treasury Premium Brands
Treasury Premium Brands Positive early momentum with portfolio premiumisation, earnings growth and margin expansion Reported Currency Constant Currency Performance summary1 A$m 1H22 1H21 % 1H21 % • EBITS increased 20.7% and EBITS margin improved 2.1 Volume (m 9Le) 8.1 9.2 (11.7)% 9.2 (11.7)% ppts to
Slide 22: Treasury Premium Brands
Treasury Premium Brands Progression against F22 strategic priorities Expand the Premium portfolio Accelerate in priority growth markets, channels and COOs • Expansion of Treasury Premium Brands portfolio continued to gain • Building momentum in priority global markets, traction in 1H22, supporting p
Slide 23: Outlook
Outlook Tim Ford Chief Executive Officer
Slide 24: F22 Group priorities
F22 Group priorities We remain focused on delivering against a clear set of priorities in F22 The world’s most admired premium wine company Divisional Treasury Treasury priorities Americas Premium Brands • Attract new consumers • Drive relentless focus on • Expand Premium portfolio premiumisation •
Slide 25: Cultivating a brighter future
Cultivating a brighter future We create long-term value by being sustainable in everything we do Our 1H22 sustainability highlights include: • Strategy defined with full suite of targets and commitments designed to drive performance • Improved reporting of progress against our targets and commitment
Slide 26: Summary and outlook
Summary and outlook • In 1H22, we delivered strong underlying growth across all divisions, with EBITS up 28% excluding Australian COO sales to Mainland China • This performance reflects the focused execution of our F22 strategic priorities and plans under our new divisional operating model, with eac
Slide 27: Questions
TREASURY WINE ESTATES Questions
Slide 28: Supplementary Information
TREASURY WINE ESTATES Supplementary Information
Slide 29: Impact of foreign exchange and hedging
Impact of foreign exchange and hedging 1H22 constant currency impact 2H22 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 2.7 (3.5) (0.8) AUD/USD COGS, EBITS +1% (1.7) Net ot
Slide 30: Reconciliation of key performance measures
Reconciliation of key performance measures Metric (A$m unless Management calculation 1H22 1H21 otherwise stated) Statutory net profit 109.1 118.0 Income tax expense 46.9 51.0 Net finance costs 34.7 39.8 EBITS Material items 45.6 60.5 SGARA (gain) / loss 26.2 11.9 EBITS 262.4 281.2 EBITS 262.4 281.2
Slide 31: Impact of cloud computing accounting policy changes
Impact of cloud computing accounting policy changes 1H19 1H20 1H21 $Am (unless otherwise stated) Reported Adjustment Restated Reported Adjustment Restated Reported Adjustment Restated Volume (m 9L cases) 18.7 — 18.7 17.7 — 17.7 17.1 — 17.1 Net sales revenue 1,507.7 — 1,507.7 1,536.1 — 1,536.1 1,410.
Slide 32: Definitions
Definitions Term Definition Cash conversion Net operating cash flows before financing costs, tax and material items divided by EBITDAS COO Country of origin CODB Cost of doing business. Gross profit less EBITS. Excludes non-cash items as well as tax, the cost of the Group’s capital structure and non
Slide 33: 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