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Treasury Wine Estates strong H1 results show profits double

Published:  18 February, 2016

Treasury Wine Estates released its interim results for the first six months ending on 31 December, 2015 with net profits after tax more than doubling to AUD$87.6m and net sales revenue up 22%.

The strong results were primarily driven by TWE's commitment to the premiumisation of its brands within its portfolio, cost savings within its supply chain and successful penetration into mainland China.

Michael Clarke, chief executive officer for TWE said: "I am very pleased with our performance in the fiscal year-to-date. We have continued to embed a sustainable and more balanced business, with revenue and earnings growth being driven by all regions and across the portfolio of brands."

Volume growth in North Asia was up 149% and was up 47% in South Asia. Earnings before interest and taxes (EBIT) nearly doubled in the regions increasing from $26m to $46.5m. Net sales revenue for the region increased from $69.5m to $157.3m year over year.

TWE has focused on brand building in the region and has also improved its routes to market in China, Singapore, Malaysia and Japan which has improved distribution of the TWE brands,  Brand activations include the global launch of 2016 Penfolds release held in Shanghai, the launch of Wolf Blass 'after six' campaign in China, increased tastings and winemaker dinners and Wolf Blass sponsorship of the National Basketball Association (NBA) in China.

Brand building in other regions as well has been paying off, with increases in net sales revenue seen in every region. Clarke said: "Our interim  2016  result demonstrates a continuation of the momentum delivered in fiscal 2015 and highlights the benefits of having repositioned our business to deliver strong earnings growth on a balanced, sustainable base."

The acquisitions during H1 of Diageo Plc's wine business may prove to be "crucial step-change" for the company to operate in the US and deliver growth in both the luxury and masstige, which is mass prestige, category.