Treasury Wine Estates said on Wednesday its operating earnings outside mainland China jumped 28per cent, underpinned by growth in its luxury and premium brands, sending shares of the world’s largest standalone winemaker nearly 12per cent higher.
Treasury has had to re-direct supply to the United States, Europe and domestically after a diplomatic row between Canberra and Beijing effectively closed the lucrative Chinese market to Australian wine.
The company said it recorded strong growth in its Americas and premium brands businesses, both of which reported a 19per cent rise in their earnings before interest, tax, SGARA and material items (EBITS).
“Penfolds growth was particularly strong in Asian markets outside of Mainland China … increasing distribution in Asia, domestic markets, Europe and the United States was a key execution highlight,” the company said in a statement.
Reported EBITS, excluding Australian COO wine sold in mainland China, rose to A$262.4 million ($187.7 million), narrowly missing market expectations of A$265 million while its total net profit slid 7.5per cent to A$109.1 million.
The company said trading conditions for the remainder of fiscal 2022 were expected to remain broadly in line with the first half across its key markets and channels.
“Despite FY22 potentially shaping up to be slightly softer than expectations, we see Treasury doing a commendable job building demand for its products in new markets,” Citi analysts said in a note.
Treasury shares jumped as much as 11.8per cent to A$11.78 in early trading, while the broader market rose 0.4per cent.
The company said it plans to increase prices across select portfolio brands to partly mitigate the impact of elevated supply chain costs and logistics.
The Melbourne-based firm retained its interim dividend of 15 Australian cents per share.
