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Treasury Wine Estates raises a toast for 2022 with bets outside China

Treasury Wine Estates on Thursday struck an upbeat tone for its prospects in fiscal 2022 outside mainland China, after the world’s biggest listed winemaker posted higher annual profit and raised its dividend.

The Australian firm has suffered in the past two years due to a diplomatic spat that prompted Beijing to impose heavy taxes on multiple Australian goods and as pandemic-driven curbs battered sales.

That pushed the winemaker to ramp up its business outside China to cushion a hit from hefty tariffs in the lucrative market by re-directing supply of its prized Penfolds label to the US, Europe and domestically.

The company “is positive on outlook across its key markets outside mainland China” for fiscal 2022, it said, as it aims for high single-digit average earnings growth over the long term.

“The short-term impact of the Covid-19 pandemic on trading conditions in our key markets remains uncertain, despite recent reopening in on-trade channels and improving trade through cellar doors,” CEO Tim Ford said.

Treasury, which in February said it would split its business in brand-led divisions to target global growth, also forecast costs related to its Australian sourced wine to remain elevated next year.

It expects divestment of non-core US brands to complete by the first half of 2022.

Net profit attributable for the year ended June 30 rose to $250 million from $245.4 million reported last year. It, however, missed a Citi estimate of $313 million.

The winemaker said annual operating earnings from the Americas region surged 23 per cent, while it jumped 10 per cent in Australia and New Zealand.

Reporting by Riya Sharma, Savyata Mishra and Shashwat Awasthi in Bengaluru; Editing by Arun Koyyur, of Reuters.

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