Despite experiencing a 3.3% decrease in net profits, totaling A$254 million (£130 million) for the fiscal year ending in June, Treasury Wine Estates (TWE) is poised to escalate its dividend distribution. Moreover, the company anticipates a sustained enhancement in its performance over the upcoming 12-month period.
TWE attributed the profit decline to reduced shipments of commercially-priced wines to the United States, aligning with its strategic shift away from the lower market segment, alongside constrained availability of luxury wine offerings.
Sales in the United States registered an 11.7% descent as part of the overarching initiative to venture into the upscale sector. TWE highlighted that overall profit margins saw an uptick due to price increments introduced across multiple brands, accompanied by internal cost-reduction measures.
Among the company’s divisions, Penfolds notably stood out with a 14.3% growth in sales. Penfolds Bin 407 Cabernet Sauvignon experienced a 9% price elevation, while the 19 Crimes label and the Squealing Pig achieved 6% and 9% price hikes, respectively, within the United Kingdom.
Further buoying TWE’s performance, high-end Californian red wine under the Stag’s Leap brand posted a notable 20% increase in specific instances.
In light of these dynamics, TWE had previously highlighted the challenging market conditions in both Australia and the UK. The company, a vocal critic of recent alterations in the excise duty regime in the UK, expects these conditions to persist moving forward.
