Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — FY2020 Earnings Presentation
39 slides from Treasury Wine Estates's earnings presentation, Aug 13, 2020
Slide 1: 2020 Annual Results Investor and Analyst Presentation
13 August 2020 ASX ANNOUNCEMENT 2020 Annual 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 13 August 2020. Links to register for the confe
Slide 2: F20 Full Year Results
F20 FULL YEAR RESULTS oe WINE ESTATES 13 August 2020
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: This is Treasury Wine Estates
This is Treasury Wine Estates We are a focused premium wine company with strong positions in key global markets #1 wine importer in China #2 luxury in US F20 Volume Growing global premium wine market1 > 70% of TWE revenue and increasing 10% 28% 24% Award winning and diversified portfolio of premium
Slide 6: Long term investment case driving growth through the cycle
Long term investment case driving growth through the cycle Our ambition is to be the world’s most admired premium wine company LONG TERM INVESTMENT CASE Long-term Group EBITS margin ambition 25%+ Asia Leading in luxury wine Expanding market leadership Attractive category Through the cycle structural
Slide 7: Impact of COVID-19 in F20
Impact of COVID-19 in F20 TWE’s diversified global business model is well placed to navigate COVID-19 impacts Consumption ▪ In-home consumption has increased during lockdown periods & Sales ▪ Bricks and mortar retail and e-commerce channels are performing strongly Patterns ▪ Consumers are turning to
Slide 8: COVID-19 Plan Ahead Agenda
COVID-19 Plan Ahead Agenda Our plan is to emerge a fitter and stronger global business COVID-19 Changes to work and At-home, food-led Convenience of purchase TREND lifestyle arrangements, consumption is growing, as has become key to with increased focus on is demand for trusted and consumers, eviden
Slide 9: F20 Financial Performance
F20 Financial Performance1,2,3,4 Resilient performance through challenging trading conditions NSR EBITS NPAT $2.65bn (6.4)% $533.5m (21.7)% $315.8m (25.3)% NSR per case EBITS margin EPS $81.9 2.6% 20.1% (4.0)ppts 43.9cps (25.5)% Cash conversion ROCE Luxury and masstige 94.7% 16.3ppts 10.6% (3.3)ppts
Slide 10: Matt Young Chief Financial Officer
Matt Young Chief Financial Officer P A G E 9
Slide 11: F20 result; key measures of performance
F20 result; key measures of performance1,2 Group NSR (A$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 P A
Slide 12: F20 result; other earnings insights
F20 result; other earnings insights Benefits Expected Material Items Benefits F20 F19 from one-off cost 1/3 luxury capacity South Australian luxury expansion F25 $(35.0)m $(25.3)m $- increase Overheads - $35m F21 Strategic Agenda - overhead & supply chain $(45.0)m $(11.3)m $- restructure Supply Chai
Slide 13: Balance Sheet
Balance Sheet1,2,3 A$m F20 F19 Strong, efficient and flexible balance sheet Cash & cash equivalents 449.1 401.8 Receivables 554.1 662.0 • Net assets decreased $18.1m on a reported currency basis; Current inventories 1,017.4 1,001.7 adjusting for the movement in foreign currency, net assets Non-curre
Slide 14: Inventory analysis
Inventory analysis Inventory at book value split by segment1,2,3 Flexible luxury wine allocation program a key strength • Total inventory volume declined 9%, driven by the 2020 Australian vintage where intake was down approximately 30% versus the prior year, partially offset by the carry forward of
Slide 15: Cash flow and net debt
Cash flow and net debt1 A$m (unless otherwise stated) F20 F19 Operating cash flow performance remains strong EBITDAS 697.9 842.9 • Strong cash conversion of 94.7%, with lower 4Q20 sales and a Change in working capital (22.2) (167.5) smaller Australian vintage offset by higher levels of inventory for
Slide 16: Capital Expenditure
Capital Expenditure Continuing to prioritise investment to support growth A$m F20 F19 IT spend 16.2 16.6 • Capital expenditure (capex) $188.8m in F20, including: Oak purchases 1 2.4 1.1 − Maintenance & replacement capex of $82.6m Vineyard redevelopments 30.8 33.0 − Growth capex of $106.2m includes i
Slide 17: Capital Management
Capital Management TWE’s strong, flexible and efficient capital structure retained; liquidity enhanced in 2H20 • Investment grade credit metrics maintained: - Net debt / EBITDAS1 2.2x at F20 (vs 1.8x at F19) and interest cover 10.1x - TWE is confident of maintaining the below 2.0x net debt / EBITDAS
Slide 18: 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 1 7
Slide 19: Asia
Asia Strong market fundamentals remain in place, with return to depletions growth in 4Q20 a positive Asia regional performance Business headlines • EBITS declined 11.2% and EBITS margin rose 1.6ppts to 39.5%: $Am F20 F19 % F19 % − Volume and NSR declines of 23.7% and 14.7% respectively Reported Curr
Slide 20: Asia Brand Highlights
Asia Brand Highlights Recruiting New Consumers Driving Premiumisation Consumer Experiences Rawson’s Retreat Your Ideal Penfolds Bin 389 60th Anniversary Wolf Blass Michelin South East Asia Wine Moment Platform Year of the Rat Special Edition Food & Wine Partnership P A G E 1 9
Slide 21: Americas
Americas Focus brand portfolio continues to grow strongly despite challenging US market conditions Americas regional performance Business headlines $Am F20 F19 % F19 % • EBITS declined 43.8% and EBITS margin was 7.9ppts lower to 13.8%, Reported Currency Constant Currency reflecting: − Volume and NSR
Slide 22: Americas Brand Highlights
Americas Brand Highlights Recruiting New Consumers Driving Premiumisation, Growing Our Heartland Connecting Digitally 19 Crimes Cali Red Snoop Dogg Stags’ Leap DTC Acceleration Matua Refreshment Platform & Partnership Through COVID-19 Coldbox Distribution Gains P A G E 2 1
Slide 23: Australia & New Zealand
Australia & New Zealand Continued positive momentum in growing masstige portfolio, led by key focus brands ANZ regional performance Business headlines $Am F20 F19 % F19 % • EBITS declined 13.0% and EBITS margin fell 2.9ppts to 22.5%, reflecting: Reported Currency Constant Currency − Volume and NSR d
Slide 24: ANZ Brand Highlights
ANZ Brand Highlights Recruiting New Consumers Driving Premiumisation Growing Our Heartland 19 Crimes Disruptive Integrated Penfolds 175th Anniversary & Leveraging Partnerships for Long Activations 100 Point Special Bin 111A Term Brand Growth P A G E 2 3
Slide 25: Europe, Middle East & Africa
Europe, Middle East & Africa Resilient performance through challenging conditions; mid-teens EBITS margin maintained EMEA regional performance Business headlines $Am F20 F19 % F19 % • EBITS declined 24.7% and EBITS margin fell 3.8ppts to 14.0% as a result of: Reported Currency Constant Currency − Vo
Slide 26: EMEA Brand Highlights
EMEA Brand Highlights Recruiting New Consumers Driving Premiumisation Growing Our Heartland Blossom Hill Gin Fizz Launch Premium DTC Platform Launch Wolf Blass Deliveroo Partnership Through COVID-19 P A G E 2 5
Slide 27: Tim Ford Chief Executive Officer
Tim Ford Chief Executive Officer P A G E 2 6
Slide 28: TWE 2025
TWE 2025 ympidow TWE Way To be the world’s We boldly lead most admired > change in the premium wine ppp) world of wine company pp) Dip GAME - We bring our whole self How we ” ~ Consumer focused will win premium brand . WHAT ARE THE ELEMENTS - We are portfolio ’ & HOW DOES IT ALL courageous - Multi-r
Slide 29: Executing the Game Plan – our F21 priorities
Executing the Game Plan – our F21 priorities Execution of key F21 priorities will accelerate our through the cycle growth ambitions 01 02 03 04 05 Manage performance Shift to a consumer- Optimise our global Deliver the future state Accelerate separate led marketing model supply chain US wine busines
Slide 30: Delivering a future state premium US wine business
Delivering a future state premium US wine business Progress update of key business restructuring initiatives to be delivered through to 1H22 #1 #2 #3 #4 Adjust operating model and Restructuring of supply chain Reduction of lower margin Divestiture of brands and organisational structure to reduce COG
Slide 31: Accelerate the separate focus across portfolio
Accelerate the separate focus across portfolio A separate focus across the portfolio will drive long-term growth and value creation TWE premium portfolio Brand hierarchy High-end luxury brand with Portfolio of differentiated differentiated price tiers premium wine brands Portfolio centre of gravity
Slide 32: Summary and outlook
Summary and outlook • F20 result reflects resilient performance despite two significant market-driven factors: COVID-19 and challenging conditions in the US wine market • TWE has remained profitable, with strong cash conversion and a healthy balance sheet • While positive signs of recovery have emer
Slide 33: P A G E 3 2
P A G E 3 2
Slide 34: P A G E 3 3
P A G E 3 3
Slide 35: Volume
Volume (Volume, m 9Le) F20 F19 % Americas 12.4 14.0 (11.4)% Asia 3.3 4.3 (23.7)% EMEA 8.9 9.2 (4.0)% ANZ 7.8 7.9 (1.9)% TWE EBITS 32.4 35.4 (8.8)% • Americas: Lower volume driven by 17% decline in 2H20 volumes with Commercial volumes down 19% • Asia: Volume decline 23.7% driven by 2H20 declines acro
Slide 36: Profit & Loss
Profit & Loss1 First Half Second Half Full Year F19 F19 F19 $Am (unless otherwise stated) F20 F19 Change Constant Change F20 F19 Change Constant Change F20 F19 Change Constant Change Currency Currency Currency Net sales revenue 1,536.1 1,507.7 1.9 % 1,546.4 (0.7)% 1,113.4 1,323.9 (15.9)% 1,373.9 (19
Slide 37: Impact of foreign exchange rate movements & hedging
Impact of foreign exchange rate movements & hedging F20 constant currency impact F21 EBITS sensitivity and risk management Currency Primary EBITS Movement Pair Exposure Sensitivity (A$m) AUD/USD COGS, EBITS +1% (3.7) AUD/GBP COGS, EBITS +1% (1.2) CAD/USD NSR +1% 1.1 EUR/GBP NSR +1% 0.7 USD/GBP COGS
Slide 38: Definitions
Definitions Term Definition CAGR Compound annual growth rate 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 COO Country of ori
Slide 39: 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