Treasury Wine Estates posts 55pc lift in full-year profit

Treasury has posted a 55pc surge in full-year profit led by continued robust earnings growth in Asia and America.

Treasury Wines Estates chief executive Michael Clarke.

Treasury Wine Estates has generated earnings growth from all its key regions, led by near 50 per cent growth in profitability in North America and Asia, and will reward shareholders with a $300 million share buyback as it also delivered on its earnings targets three years ahead of planned.

The world’s largest listed wine company (TWE), which owns brands such as Penfolds, Wolf Blass and Berringer, said that net profit for 2017 was up 55 per cent to $269.1m, with earnings per share up 50 per cent to 36.5 cents per share.

Net sales revenue was 7.6 per cent stronger at $2.4 billion, while pre-tax earnings were 36 per cent stronger at $455.1m.

The stronger profit and sales, which saw Treasury Wine hit its target of high-teens EBITS margin three years ahead of the initial plan of 2020, was driven by the acquisition of Diageo Wine’s American and European drinks arm.

Treasury Wine also enjoyed profit gains across all its regions, Australia, New Zealand, Europe, Asia and North America, although pre-tax earnings from Europe were only slightly positive due to the impact of currency movements.

Treasury Wine said it would continue to strip costs out of the business and was on track to deliver at least $100m of run-rate cost of goods sold savings from the company’s supply chain optimisation initiative before 2020.

“Delivering revenue growth and margin accretion over time remains a priority,’’ said Treasury Wine boss Michael Clarke, “supported by our investments in building closer, more efficient and strategic partnerships with consumers and by positioning TWE as the wine supplier of choice across multiple brand portfolios and countries of origin.’’

Supporting the share price and in an extra gift to shareholders, Treasury Wine will commence a $300m share buy back this year. The winemaker also declared a final dividend of 13 cents per share bringing total dividend for 2017 to 26 cents per share, a 6 per cent increase on 2016.

At 10.52am (AEST), shares in Treasury were trading up 1.43 per cent at $12.76.