A strong performance from the high-end Penfolds division has helped Australia’s largest wine group Treasury Wine Estates withstand a tougher consumer spending environment, with demand for more expensive wines still robust even after price rises.
Treasury Wine lifted its final dividend to 17¢ a share from 16¢ a year earlier. The company said price increases pushed through across several brands was a key factor in profit margins increasing overall, along with cost-cutting.
The Penfolds division delivered a 14.2 per cent rise in earnings to $365 million in 2022-23.
Chief executive Tim Ford said consumer demand for premium wine was expected to stay consistent over the next year. He said “consumer demand for luxury wine is strong”, although there are challenging conditions in the lower tier segments of below $10 per bottle.
The cheaper end of the market is feeling the pinch, with the Treasury Premium Brands business suffering a 5.4 per cent drop in earnings to $81.7 million. That division includes major brands Wolf Blass, Lindemans, Squealing Pig, Pepperjack, Wynns, Seppelt and 19 Crimes.
Treasury Wine Estates chief executive Tim Ford
Treasury Wines in early July announced plans to shut its large production facility at Karadoc in Victoria, which makes lower end wine under labels such as Lindemans, Yellowglen and Wolf Blass, in June next year.
Total revenue was down 1.7 per cent to $2.49 billion for the 12 months ended June 30. Net profit after tax was 3.3 per cent lower at $254.5 million. Earnings before interest, tax and the SGARA agricultural accounting standard were up 11.4 per cent to $584 million.
About $90 million in costs are being incurred across 2022-23 and 2023-24 as the company repositions its commercial wine
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