Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — FY2013 Earnings Presentation
32 slides from Treasury Wine Estates's earnings presentation, Aug 22, 2013
Slide 1: Treasury Wine Estates Full Year Results
For personal use only TREASURY WINE ESTATES FULL YEAR RESULTS 22 August
Slide 2: David Dearie, Chief Executive Officer
For personal use only David Dearie Chief Executive Officer Chateau St Jean, US
Slide 3: Agenda
Agenda For personal use only • Result headlines • Excess US inventory • Americas F13 result • Financials • Regional performance • F14 outlook • Q+A 2
Slide 4: Result headlines
Result headlines For personal use only • Statutory net profit after tax (including material items) $42.3m • Addressing our inventory challenges in the US • Growth in three out of four regions; collectively EMEA, Asia and ANZ EBITS up 17% • Pre-tax material item expense of $154.7m reported • EBITS $2
Slide 5: Excess inventory – multiplier effect
Excess inventory – multiplier effect For personal use only Annual TWE Consumption Inventory V11 V12 V13 V14 F13 F14 F15 F16 Depletion FG ready to Ship Wine in Tank Grape on Vine Commercial 1 ** 0.5 0.5 0.7 Masstige 1 1 1 1 V10 V11 V12 V13 F13 F14 F15 F16 Depletion FG ready to Ship Wine in barrel Gra
Slide 6: US inventory – background
US inventory – background For personal use only • TWE sells wine to more than 170 distributors in the US • TWE inherited circa 5 – 6 weeks inventory in excess of target at demerger • TWE has shipped circa 300k cases less each year – Lower depletions resulted in TWE adding circa 2 weeks additional in
Slide 7: Addressing excess inventory at US distributors
Addressing excess inventory at US distributors For personal use only Actions Impacts and outcomes Destruction • No wine shipped1 to distributors in F13 will be destroyed of old and obsolete • TWE raised a provision for up to $33.8m to support the disposal of old and inventory at obsolete, predominan
Slide 8: Excess bulk wine & finished goods
Excess bulk wine & finished goods For personal use only Actions Impacts and outcomes TWE booked • As a result of lower shipments in F14, an $82.4m past optimistic NPD2 forecasts and inventory lower depletions of tactical brands, write down to TWE booked an $82.4 million bulk NRV1 (circa wine and fin
Slide 9: Actions in the US to address challenges
Actions in the US to address challenges For personal use only • Action 1: Integrated Business Planning (IBP) – Complete implementation of IBP to identify and manage risks and execute solutions – Joint sales and operations planning with key distributor partners • Action 2: Enhanced sales capability –
Slide 10: Americas – Addressing the challenges
Americas – Addressing the challenges For personal use only A$m F13 F12 % • EBITS down 14.5% to $66.8 million on a constant Constant currency currency basis reflecting lower shipments,11% less US- sourced luxury wine available for sale and increased Shipments (m 9L cases) 15.4 15.7 (1.6)% V11-impacte
Slide 11: Tony Reeves, Chief Financial Officer
For personal use only Tony Reeves Chief Financial Officer Penfolds Magill Estate
Slide 12: Profit & Loss
Profit & Loss Reported Currency Constant Currency For personal use only $Am (unless otherwise stated) F13 F12 Change F12 Change Volume (m 9L cases) 32.1 31.8 0.9 % 31.8 0.9 % Net sales revenue 1,688.7 1,640.8 2.9 % 1,642.0 2.8 % Cost of goods sold (1,181.8) (1,100.0) (7.4)% (1,104.4) (7.0)% Cost of
Slide 13: Material items
Material items For personal use only A$m F13 • US inventory provision and write down costs consist of: US inventory provisions & write downs (154.3) – $33.8m destruction of aged and obsolete US Matua Malborough winery fair value gain 7.9 distributor inventory; Lease termination costs (5.3) – $38.1m
Slide 14: Tax Consolidations Project
Tax Consolidations Project For personal use only • Based on current law TWE is required to reset the tax base of all its assets as at the date of the demerger based on relative market values • Full calculation not undertaken at the time of the demerger due to discussion paper released in November 20
Slide 15: Cash Flow
Cash Flow For personal use only A$m (unless otherwise stated) F13 F12 Continued targeted investment EBITDAS 286.0 277.9 • Increase in working capital of $143.2m principally Change in working capital (143.2) (9.8) reflects the cash flow impact of increased non-current Other items 14.0 (0.1) Net opera
Slide 16: Capital expenditure
Capital expenditure For personal use only A$m F13 1H13 2H13 F12 Investing for future growth IT spend 33.0 11.8 21.2 16.7 • TWE invests for future growth; total capital and Vineyard Redevelopments 15.6 4.3 11.3 15.8 investment expenditure of $191.3 million Oak Purchases 20.2 3.8 16.4 17.4 Penfolds Lu
Slide 17: Balance Sheet
Balance Sheet For personal use only A$m F13 F12 Targeted investment drives higher net debt • Continued investment for growth driving higher non-current Cash & cash equivalents 10.8 28.6 inventory, PP&E and agricultural assets Receivables 460.9 447.6 Current inventories 714.5 711.5 • Higher net worki
Slide 18: Inventory analysis
Inventory analysis For personal use only Inventory at book value split by segment – F12 and F13 23% increase in non-current inventory • Strong 2013 Australian vintage and 2012 Californian $711.5m $714.5m $362.5m $446.0m $1,074.0m $1,160.5m vintage enabled TWE to continue to build non- Total luxury 2
Slide 19: Foreign currency impact & risk management
Foreign currency impact & risk management For personal use only FX sensitivity • TWE’s FX sensitivity to EBITS (pre FX risk management) is as follows: – Using an indicative spot rate of USD0.92, 1¢ change will result in A$2.5m EBITS impact – Using an indicative spot rate of £0.60, 1p change will res
Slide 20: David Dearie, Chief Executive Officer
For personal use only David Dearie Chief Executive Officer Wynns Coonawarra Estate, SA
Slide 21: EMEA – Focus and superb execution
EMEA – Focus and superb execution For personal use only A$m F13 F12 % • Solid EBITS growth, up $11.6 million to $16.0 million, on Constant currency a constant currency basis Volume (m 9L cases) 6.7 6.9 (3.1)% • Excellent execution, brand building and brand selling NSR (A$m) 248.5 249.4 (0.4)% result
Slide 22: Asia – Price, mix and execution
Asia – Price, mix and execution For personal use only A$m F13 F12 % • Exceptional EBITS growth up 35.6% reflects increased Constant currency allocation of Penfolds luxury and icons Volume (m 9L cases) 1.4 1.2 20.8% • EBITS margin up 2.3ppts NSR (A$m) 135.4 105.8 28.0% • NSR per case up $5.48 reflect
Slide 23: ANZ – Strong finish in a tough market
ANZ – Strong finish in a tough market For personal use only A$m F13 F12 % • Strong 2H13 offset challenging 1H13; EBITS up 0.6% to Constant currency $110.1 million on a constant currency basis (2H13 Volume (m 9L cases) 8.6 8.0 6.5% EBITS: $74.1m, 2H12 EBITS: $61.1m) NSR (A$m) 600.8 575.9 4.3% • Stron
Slide 24: F14 Outlook
F14 Outlook • For personal use only Long term fundamentals of the global wine industry remain positive – Favourable global supply and demand cycle – Global consumer demand for premium wine continues to grow • Building TWE’s portfolio of iconic brands remains a key focus; significant increase in bran
Slide 25: Questions
For personal use only Questions Wolf Blass, SA
Slide 26: 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 27: Supplementary Information
For personal use only Supplementary Information Beringer, US
Slide 28: Brand Business Units
Brand Business Units For personal use only • Beringer • US brands: Cellar No. 8 / Chateau St. Jean / Emma Pearl / Etude / Greg Norman Estates / Meridian / Santa Barbara Collection / Sbragia Family Vineyards / Sledgehammer / Souverain / St. Clement / Stags’ Leap / Be./ • Other brands: Castello di Gab
Slide 29: Segment Information
Segment Information For personal use only Reported currency Constant currency A$m F13 F12 Change F12 Change ANZ Volume1 8,556.3 8,037.4 6.5% 8,037.4 6.5% ANZ NSR 600.8 574.1 4.7% 575.9 4.3% ANZ EBITS 110.1 109.0 1.0% 109.4 0.6% Americas Shipments 15,407.6 15,652.5 (1.6)% 15,652.5 (1.6)% Americas NSR
Slide 30: Definitions
Definitions For personal use only Term Definition Throughout this presentation, constant currency assumes current and prior period earnings of Constant currency foreign operations are translated and cross border transactions are transacted at current year exchange rates NSR Net sales revenue EBITDAS
Slide 31: F13 foreign currency impact
F13 foreign currency impact For personal use only EBITS Impact of FX (translation and transaction) on F13 Primary Currencies EBITS A$m Depreciation of the AUD/USD in May / June and a strengthening Americas USD, CAD (0.9) CAD led to a favourable currency impact in the second half of F13 GBP, EUR, EME
Slide 32: Reconciliation to statutory statement of cashflows
Reconciliation to statutory statement of cashflows For personal use only Reconciliation to Statement of Cashflows F13 F12 Net operating cash flows before financing costs, 156.8 268.0 tax and material items Net interest paid (14.7) (6.8) Tax paid (23.2) (59.9) Net operating cash flows before net capi