Insights

Treasury Wine Estates (ASX:TWE) share price bubbles 12% higher

The Treasury Wine Estates Ltd (ASX:TWE) share price has risen 12% after yesterday’s FY21 first half result, stronger management confidence.
The post Treasury Wine Estates (ASX:TWE) share price bubbles 12% higher appeared first on The Motley Fool Australia. –

treasury wine share price

The Treasury Wine Estates Ltd (ASX: TWE) share price is up 12% at the time of writing.

Yesterday, the global wine business delivered its FY21 half-year result to investors, which showed a heavy profit decline. However, management also said they were more confident about a recovery in some aspects of the business.

Brokers have had their say about the company’s result and medium-term prospects.

If you didn’t catch the report yesterday, here are some of the main numbers:

Highlights of Treasury Wine Estates’ FY21 half-year result

The company said that its earnings before interest, tax, SGARA and material items (EBITS) fell by 23% to $284.1 million and the EBITS margin declined by 3.8 percentage points to 20.1%.

Underlying net profit after tax (NPAT) declined 24% to $175.3 million and underlying earnings per share (EPS) fell 24% to 24.3 cents.

Statutory NPAT declined 43% to $120.9 million and statutory EPS declined 43% to 16.8 cents.

On the positive side of things, Treasury Wine Estates said that retail and e-commerce channels continue to perform at elevated levels across all key markets, reflecting a shift in consumer behaviour towards in-home consumption of well-known and trusted brands.

However, there continues to be disruption to sales channels for higher margin luxury wine and reduced shipments to China because of the Chinese investigations and rules introduced relating to anti-dumping.

Despite the decline in profit, Treasury Wine Estates was still able to reduce net debt by $403.7 million and the board declared a fully franked dividend of 15 cents per share.

Re-organisation

TWE is going to implement a new divisional operating model, aiming at maximising the benefits of a separate focus across brands, rather than regions. Those three new divisions will be: Penfolds, Treasury premium brands and Treasury Americas.

The company also said that it has progressed on key initiatives to deliver a future state premium wine business in the US, including the planned exit of a significant portion of the commercial brand portfolio. Treasury Wine Estates also said it’s going to explore the divestment and exit of other non-priority brands, operating assets and leases as it focuses on growing its premium brand portfolio to drive growth in the region.

Growing management confidence about re-allocating products

The company has been working on a response to the Chinese measures. TWE has increasing confidence about its plans for re-allocating its Penfolds Bins and Icon range from China to other markets.

It’s expecting to continue to engage with its customer and consumer base, with modest benefits to commence towards the end of FY21.

Broker thoughts on TWE

Morgans said that the report was better than it had expected thanks to the domestic market and Asia. The broker also pointed to an improving balance sheet and good cashflow. It said it would buy TWE shares if the share price were to significantly decline. It increased its price target to just over $11.

However, Citi wasn’t really convinced. It was impressed by the Asia result considering the China difficulties, but first half conditions are expected to continue in the second half. Citi still considers TWE shares as a sell, with a price target of $8.60.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Treasury Wine Estates (ASX:TWE) share price bubbles 12% higher appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!