Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — 1H23 Earnings Presentation
30 slides from Treasury Wine Estates's earnings presentation, Feb 15, 2023
Slide 1: 2023 Interim Results Investor and Analyst Presentation
15 February 2023 ASX ANNOUNCEMENT 2023 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 commencing at 10:00am (AEST) on 15 February 2023. Links to register for the
Slide 2: F23 Half Year Results
F23 Half Year Results 15 FEBRUARY 2023
Slide 3: Important information
Important information This presentation is in summary form and is not necessarily complete. It should be read together with the Company’s Annual Report for 30 June 2022, Appendix 4D for the half year ended 31 December 2022 and other announcements lodged with the Australian Securities Exchange, which
Slide 4: Introduction
Introduction Tim Ford Chief Executive Officer
Slide 5: 1H23 Announcement Highlights
1H23 Announcement Highlights 1 • Strong earnings growth and margin expansion in 1H23 with EBITS +17% to $307.5m and EBITS margin +3.2ppts to 23.9%: – Delivered through Luxury portfolio growth, price increases and supply chain cost savings – Each division delivered improved NSR per case, EBITS growth
Slide 6: 1H23 Financial Highlights
1H23 Financial Highlights 1,2,3 Strong earnings growth and margin expansion delivered in 1H23 NSR EBITS NPAT $1.3bn 1.4% $307.5m 17.2% $193.7m 18.7% NSR per case EBITS margin EPS $108.6 13.5% 23.9% 3.2 ppts 26.8cps 18.6% Cash conversion ROCE Luxury and Premium 67.7% (50.5)ppts 11.2% 0.9ppts contribu
Slide 7: 1H23 Divisional performance
1H23 Divisional performance Each division delivered improved NSR per case, EBITS growth and EBITS margin expansion Penfolds Treasury Americas Metric1 1H23 % 1H23 % 1H23 % NSR (A$m) 410.2 7.2% 485.0 4.1% 389.3 (7.0)% NSR per case (A$) 352.2 2.6% 143.1 23.1% 53.5 3.9% EBITS (A$m) 181.6 10.0% 115.2 35.
Slide 8: Financial Performance
Financial Performance Matt Young Chief Financial Officer
Slide 9: Key measures of performance
Key measures of performance 1 Group NSR (A$m) and NSR per case Group EBITS (A$m) and EBITS margin 108.6 22.7% 23.2% 23.9% 95.6 20.7% 87.0 19.9% 80.6 82.5 355.9 324.3 1,536.1 307.5 1,507.7 1,410.0 281.2 262.4 1,267.0 1,284.5 70% 73% 75% 83% 85% 30% 27% 25% 17% 15% 1H19 1H20 1H21 1H22 1H23 1H19 1H20 1
Slide 10: Material items
Material items Previously announced cost programs are now largely complete Projected Benefits Total cost to Recognised Material Items Benefits one-off cost Status from date in 1H23 at inception Divestment of US brands & assets Enable prioritisation of premium focus brand portfolio as driver of F21 $
Slide 11: Balance sheet
Balance sheet 1,2 1H23 F22 1H22 A$m 31-Dec-22 30-Jun-22 31-Dec-21 Cash & cash equivalents 684.9 430.5 617.1 • Net assets increased $122.1m on a reported currency Receivables 574.6 564.4 614.4 basis in 1H23 Current inventories 1,014.3 947.9 913.8 • Adjusting for the movement in foreign exchange Non-c
Slide 12: Inventory analysis
Inventory analysis Inventory at book value split by price segment1,2,3 $1,014.3m $913.8m $1,028.5m $966.7m $2,042.8m $1,880.5m • Total inventory volume increased 10% versus the pcp 45% 40% • Total inventory value increased 9%: Total Luxury 58% 60% $1,181m − Current inventory increased $100.5m to 71%
Slide 13: Cash flow and net debt
Cash flow and net debt1 A$m (unless otherwise stated) 1H23 1H22 EBITDAS 381.3 335.7 Change in working capital (115.7) 52.9 Other items (7.5) 8.3 • Cash conversion of 67.7% reflects the return to a normalised Net operating cash flows before financing costs, tax & material items 258.2 396.9 working ca
Slide 14: Historic cash conversion
Historic cash conversion 1H23 cash conversion reflects a normalised cycle, with full year delivery expected in line with target Cash conversion excluding Luxury and Premium non-current inventory Earlier sales phasing to China prior to MOFCOM tariffs 140% Earlier sales phasing to 121.0% mitigate supp
Slide 15: Capital expenditure
Capital expenditure A$m 1H23 1H22 Vineyard redevelopments 6.6 11.2 • Capital expenditure (capex) $65.5m in 1H23, including: Wine making equipment and facilities 13.6 6.7 − Maintenance & replacement capex of $36.4m Technology 7.5 4.2 − Acquisition of previously leased vineyard in the US Oak purchases
Slide 16: Capital management
Capital management • Efficient and flexible investment grade capital structure retained: - Net debt / EBITDAS1 1.7x at 1H23, down from 1.8x in the pcp and within the target 1.5x – 2.0x range - Excellent capacity to support continued investment and growth • Total available liquidity $1.5bn, comprisin
Slide 17: Divisional Performance
Divisional Performance Tom King Managing Director, Penfolds Ben Dollard President, Treasury Americas Peter Neilson Managing Director, Treasury Premium Brands
Slide 18: Penfolds
Penfolds Continuing to deliver strong distribution and demand growth across a number of key global markets Reported Currency Constant Currency Performance summary1 A$m 1H23 1H22 % 1H22 % • EBITS increased 11.0% and EBITS margin increased 1.7 ppts Volume (m 9Le) 1.2 1.1 4.4% 1.1 4.4% to 44.3%: NSR 41
Slide 19: Treasury Americas
Treasury Americas EBITS growth and margin expansion led by the Luxury portfolio, portfolio mix to re-balance in 2H23 Performance summary1 Reported Currency Constant Currency A$m 1H23 1H22 % 1H22 % % Organic2 • EBITS increased 14.9% and EBITS margin improved 4.0ppts to 23.7%; on an organic basis EBIT
Slide 20: Treasury Premium Brands
Treasury Premium Brands Further progress towards divisional financial priorities, including EBITS growth and margin expansion Reported Currency Constant Currency Performance summary1 A$m 1H23 1H22 % 1H22 % • EBITS increased 41.6% and EBITS margin improved 3.8 ppts to Volume (m 9Le) 7.3 8.1 (10.5)% 8
Slide 21: Outlook
Outlook Tim Ford Chief Executive Officer
Slide 22: F23 Group priorities
F23 Group priorities Our priorities remain consistent and clearly focused on progression towards our TWE 2025 strategy The world’s most admired premium wine company Divisional priorities • Attract new consumers • Expand Premium portfolio • Expand Premium portfolio • Grow global distribution and • Ma
Slide 23: Summary and outlook
Summary and outlook • We delivered strong progress towards our financial growth objectives in 1H23, with EBITS growth of 17% driven by improved revenue per case and EBITS margin expansion across all divisions • In F23, we remain on track to deliver strong EBITS growth and EBITS margin expansion: – T
Slide 24: 2023 Investor Day
2023 Investor Day Treasury Wine Estates will host an Investor Day on 8 March 2023 in Napa, California This event will be webcast at tweglobal.com For further information on Treasury Wine Estates, please refer to our 2022 Fact Book, which is available via the following link: TWE 2022 Fact Book 23
Slide 25: Questions
TREASURY WINE ESTATES Questions
Slide 26: Supplementary Information
TREASURY WINE ESTATES Supplementary Information
Slide 27: Contribution of acquired and divested brands - Treasury Americas
Contribution of acquired and divested brands - Treasury Americas 1H22 1H23 Divested US Frank Family brands1 Vineyards2 Volume (m9le) 0.2 0.1 NSR (A$m) 20.0 69.4 EBITS (A$m) 5.1 29.7 1. Includes 1H22 contribution of Provenance (divested November 2021) and Chateau St Jean (divested December 2021) 2. I
Slide 28: Impact of foreign exchange and hedging
Impact of foreign exchange and hedging 1H23 EBITS constant currency impact 2H23 EBITS sensitivity and risk management CFX Impact (A$m) EBITS Currency Primary Movement Sensitivity Currency Underlying Hedging1 Total Pair Exposure (A$m) AUD/USD and AUD/GBP 11.7 (3.6) 8.1 AUD/USD COGS, EBITS +1% (2.3) N
Slide 29: Reconciliation of key performance measures
Reconciliation of key performance measures Metric (A$m unless Management calculation 1H23 1H22 otherwise stated) Statutory net profit 188.2 109.1 Income tax expense 72.3 46.9 Net finance costs 37.6 34.7 EBITS Material items (gain) / loss (19.7) 45.6 SGARA (gain) / loss 29.0 26.2 EBITS 307.5 262.4 EB
Slide 30: 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