Treasury Wine Estates released details on transition to Collective portfolio

Treasury Wine Estates has also provided detail on its transition into its new luxury portfolio-led operating model. See the details.

Treasury Wine Estates has provided detail on its new luxury portfolio-led operating model, effective from July 1.

In an investor update on Tuesday morning, the Australian wine heavyweight said transition to the new model will include the formation of its new global premium division, Treasury Collective.

TWE is planning for continued growth from its priority brand portfolio, which includes brands such as 19 Crimes and Squealing Pig, to mitigate the impact from continued declines in the commercial portfolio, which includes non-priority brands like Wolf Blass and Lindemans.

The Collective portfolio profile’s net sales revenue is made up of 42 per cent in the Americas, 28 per cent in Australia and New Zealand, 26 per cent in Europe, the Middle East and Africa, and 4 per cent in Asia.

TWE also forecast an on-market share buyback for up to 5 per cent of issued capital, as the board believes the company’s shares are materially undervalued, with the buyback reflecting its confidence in the financial strength and long-term outlook of the company.

As of 1:30pm Tuesday, its share price was sitting at $8.08, down almost 35 per cent on 12 months prior.

TWE also reaffirmed an expected EBITS of $770m, up 17 per cent on the prior corresponding period.

Its luxury brand portfolio, led by Penfolds and DAOU, is expected to drive growth in F26, however growth in its Treasury Americas division is expected to be modest due to economic uncertainty and weaker consumer demand in the United States.

Strong performance in Asia following the re-establishment of the Australian country of origin portfolio in China is expected to deliver low-double digit EBITS growth for Penfolds.