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F16 profits double at Treasury Wine Estates

Published:  18 August, 2016

Net profits are up 131% at Australian winemaker Treasury Wine Estates.

In its yearly results released today (August 18), Treasury posted strong financial results.

Net profit more than doubled, with Treasury's net profits reaching AU$179.5m for the 12 months to June 30, compared with AU$77.6m in the same period a year earlier.

Sales were boosted by the acquisition of Diageo's wine business which was bought last October for £361m.

This sale meant that Treasury now owns UK wine brand Percy Fox, including wine brands Blossom Hill and Piat d'Or, as well as US-based Chateaux & Estate Wine business, whose brands include Beaulieu Vineyards, Sterling Vineyards, Acacia, Provenance and Hewitt.

"Our F16 result demonstrates that momentum across our business is accelerating. TWE is now delivering consistent earnings growth and margin accretion on a more balanced, sustainable and quality earnings basis," Treasury's CEO, Michael Clarke said.

The results mark something of a turnaround for the business under the leadership of CEO Michael Clarke, who has been responsible for slimming down the company's portfolio to focus on the premium end of the market.

Since 2014, the number of labels dropped from 83 to 45 today, which includes those that came with the Diageo acquisition.

Earnings before tax (EBITS) in Asia grew by 40% compared with the previous year to AU$102m, with volumes increasing by nearly 40%.

This was driven by the company's continued optimisation of routes-to-market across the region and "increasing consumer demand for imported wine brands".

In Europe, EBITS more than doubled from the previous year to $47.7m - an increase of 198% from $16m the same period last year - while the Americas saw a 64% uplift to $136.3m.

In Australia and New Zealand, EBITS grew 4% $92.3m, which TWE said was due to strong growth in its "Priority Brands" and improved pricing on supply constrained wines.