Treasury Wine Estates share price: where next following FY21 results?

We look at the highlights from the winemaker’s latest full-year results.

Treasury Wine Estates (ASX: TWE) was hit with a curveball in 2020, with China announcing it would slap tariffs of up to 212% on Australian wine imports.

After already coming under heavy selling pressure as a result of covid-19, this tariff decision provided yet another reason for investors to sell down the stock. TWE fell 11% in response to that news.

Despite all this, Treasury Wine Estates has actually seen its share outpace the broader market, rising 29% year-to-date. Even so, the stock fell after releasing what were a stable set of FY21 results to the market on Thursday, 19 August 2021.

FY21 results in focus

Despite the China tariffs triggering a strategic re-think from Treasury, the winemaker nonetheless posted a stable set of full-year results, with revenue and earnings up by low single-digits.

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On the top-line, Treasury reported net sales revenue of $2,569 million, down 3.0% on a reported basis, but up 1.3% on a constant currency basis. Net sales revenue, on a per case basis 'increased across all regions, driven by continued premiumisation and consumer-led portfolio expansion,' management said.

From an earnings perspective, the company maintained its margin profile, booking EBITS of $510 million, down 0.4% on a reported basis and 2.8% on a constant currency basis, while maintaining an EBITS margin of 19.9%. Framed against the significant loss of Chinese earnings – which declined by $77.3 million – that result should be viewed as particularly resilient.

By comparison, net profits saw more substantial growth, with profits after tax coming in at $250 million, up 1.8% on a reported basis and 5.5% on a constant currency basis. This resulted in earnings per share of 34.7 cents.

Off the back of that, the Treasury Board has declared a final dividend of 13.0 cents per share, taking FY21 dividends to 28.0 cents per share – equal to a 65% payout of NPAT.

At the time of writing, the Treasury Wine Estates share price was down 2.01% to $12.44 off the back of those results.

FY22 outlook: where next?

Looking forward, management said the focus in fiscal 2022 would remain on the company's premiumisation strategy, while noting that the outlook was positive in all geographies, bar Mainland China.

Providing more detail on the outlook, Treasury CEO Tim Ford said:

'In F22, we enter a new phase for TWE under our brand portfolio divisional operating model, led by Penfolds, Treasury Premium Brands and Treasury Americas.'

'Whilst it's early days in the change program, it is already very clear to our teams that with each division focused on their unique strategic priorities and performance accountability, we are better positioned to take advantage of previously untapped growth opportunities across the globe.'

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