Treasury Wine Estates' focus on premium product is paying off, with the wine supplier lifting full-year profit 34 per cent after increasing sales of high-end wines around the world.
The Australian wine giant recorded a net profit of $360.3 million for the year to June 30, up from $269.1 million a year earlier courtesy of margins boosted by the focus on higher quality products and cost control.
Treasury is the world's biggest listed winemaker, with major brands including Penfolds, Wolf Blass and Lindeman in its portfolio.
Since 2014 the company has increased its focus on higher-margin premium wines to boost incremental profit.
Treasury Wine chief financial officer Matt Young said in the past four years the company's offerings of lower-end wine has reduced from more than 75 per cent of volume to less than 65 per cent.
Over the same time the luxury and mass-market prestige or "masstige" portfolio has increased sales volumes by 16 per cent and revenue by 20 per cent, he said.
As part of a strategy to expand its premium offerings and capture new overseas markets, Treasury recently introduced its first offshore-produced wines - a champagne from France's Champagne region and a wine from California's Napa Valley.
It also created a wine blended with Chinese spirit baijiu to target Chinese customers.
During 2017/18 Treasury Wines recorded growth in each of its sales regions.
In the Americas - Treasury's biggest market in terms of volume and sales revenue, net sales revenue decreased by 11.3 per cent to $961.8 million due to Treasury Wine removing stock from a key distributor in order to control the distribution of its wine.
Price per case increased in the Americas by 2.4 per cent, compared to 12.7 per cent in Asia where the company's total revenue is less but the margin is greater.
Sales revenue in Asia rose 38.9 per cent to $547.6 million, while its earnings margin was 37.5 per cent in 2017/18, despite a delay in imports of Australian wine into China this year because of a period of slow customs processing.
Treasury Wine has focused its premium strategy aggressively in Europe, where it had a 7.5 per cent reduction in volume and a 3.4 per cent decrease in sales revenue to $321 million but lifted its earnings margin from 12.3 per cent to 15.4 per cent.
Australia and New Zealand remains the company's second- largest market.
ANZ net sales revenue increased by 1.3 per cent to $598.7 million while earnings margin increased by 3.9 percentage points.
Treasury Wine reaffirmed its full-year guidance of 25 per cent growth in earnings before interest, tax and selling expenses.
It will pay a fully-franked final dividend of 17 cents a share, up from 13 cents a year earlier.
Shares in Treasury Wine gained 4.5 per cent to $19.41 on Thursday.
TREASURY TOASTS PREMIUM WINE
* Full-year profit up 34 per cent to $360.3 million
* Revenue down 1.5 per cent to $2.5 billion
* Final dividend up one cent to 17 cents, fully-franked
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