Treasury Wine eyes stronger FY25 with focus on premium brands, China
FY24 profit up 8%, in line with consensus
Sees higher EBIT in FY25
Final dividend of 19 AU cents a share
Shares up 2% in early trade
Recasts, adds share moves in paragraph 7 and analysts comments in paragraphs 8 and 12
By Sameer Manekar
Aug 15 (Reuters) -Treasury Wine Estates TWE.AX is aiming for stronger growth this year as it bets on robust demand for its premium and luxury brands, with the reopening of China following the removal of punitive levies boosting its confidence.
The winemaker is forging ahead with re-establishing the portfolio of its Australia-originated Penfolds wines in China as consumers there remain keen to grab the iconic label following years of heavy tariffs that kept it off the shelves.
"Re-establishment of Penfolds Australian COO (country of origin) portfolio in China is on track, with strong shipment demand from customers and initial depletions in line with expectations," the winemaker said.
This double boost of strong demand for luxury wines and favourable China demand pushed the vintner to forecast operating earnings between A$780 million ($514.57 million) and A$810 million for fiscal 2025. It reported A$658.1 million in the prior financial year.
The Visible Alpha consensus estimates FY25 operating earnings at A$812 million.
The forecast reflects "continued strong top-line luxury portfolio growth in Penfolds and Treasury Americas, with stability expected across the remainder of TWE's global brand portfolios", Australia's largest wine producer said in its annual results report.
Treasury shares were up 1.7% as of 0042 GMT, while the broader ASX .AXJO was 0.4% higher.
"Guidance is rare in the consumer space ... we think (TWE's guidance) demonstrates management's confidence and earnings certainty created by supply constraint," analysts at Jefferies wrote in a client note.
Treasury Wine is also looking to further cement itself in the pricier wine market by creating a new "Global Premium" division by July next year, combining its antipodean premium portfolio and its Americas premium labels.
Treasury's Penfolds luxury portfolio, which includes connoisseur-favourite brands such as Grange, contributed more than half of the company's operating earnings in fiscal 2024, with 15% growth thanks to robust demand particularly in Asia.
The company's underlying net profit after tax came in at A$407.5 million ($268.62 million) for the fiscal ended June 30, 2024, up 8% over the prior year and roughly in-line with the Visible Alpha consensus estimate of A$408.9 million.
"At face value the FY25 guidance, cash conversion and outlook commentary might be better than expected," analysts at Citi wrote in a client note.
The winemaker declared a final dividend of 19 Australian cents per share, compared with 17 cents apiece last year.
($1 = 1.5158 Australian dollars)
Reporting by Sameer Manekar and John Biju in Bengaluru; Editing by Shilpi Majumdar and Stephen Coates
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