Treasury Wine Estate (ASX:TWE) - CEO, Michael Clarke
CEO, Michael Clarke
Source: Drinks Trade
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  • Consumer discretionary giant Treasury Wine Estates’ (TWE) shares have soared despite a 25 per cent dip in the company’s FY20 net profit after tax
  • COVID-19 took a toll on the winemaker’s financials over the fiscal year, coupled with a slump in luxury wine sales and trouble in the U.S. market
  • Despite the slump, the company notified stakeholders today they’d receive a fully franked eight cents for every share owned
  • However, it’s a far cry from last financial year’s 20 cents-per-share payout
  • And it seems COVID-19’s full impact on TWE’s financials is yet to be realised — the company opted not to provide any guidance for FY21
  • However, at market close, TWE shares were 12.3 per cent in the green to trade for $12.85

Consumer discretionary giant Treasury Wine Estates’ (TWE) shares have soared despite a 25 per cent dip in the company’s FY20 net profit after tax.

COVID-19 took a toll on the winemaker’s financials over the fiscal year, coupled with a slump in luxury wine sales and trouble in the U.S. market.

It wasn’t just TWE’s profit margin which took a tumble. Sales revenue slumped six per cent to $2.65 billion, while its $260.8 million statutory net profit is 36 per cent lower than last financial year’s statistics.

Treasury said it was impacted by some of its key luxury wine channels shutting up shop. It means there were lower luxury sales in FY20, combined with “unfavourable volume and portfolio mix” in the second half of the fiscal year.

In the Americas, Treasury reported a 37 per cent drop in its earnings before interest, taxes and SGARA — the shift in its vineyard crop value. Meanwhile, profit in the area also took a hit — down from last financial year’s 20.4 per cent to 13.8 per cent in FY20.

Dividend goes ahead

Although many of its key financial metrics traded lower in FY20, TWE is full steam ahead on its final dividend. Today, the company notified stakeholders they’d receive a fully franked eight cents for every share owned.

For the full financial year, this brings TWE’s payout to 28 cents per share — meaning 64 per cent of the company’s profit pie went back into shareholder’s pockets.

Although news of a dividend is something to be celebrated in this economy, it’s a far cry from TWE’s FY19 payout of 20 cents per share.

What’s to come?

It seems COVID-19’s full impact on TWE’s financials is yet to be realised — the company opted not to provide any guidance for FY21.

In today’s full-year results announcement, TWE chief Tim Ford said FY20 had proven to be a “unique” year for the company.

“Our ability to navigate the disruptions of the COVID-19 pandemic through 2H20 and continue to deliver profitability and strong cash flow performance is representative of the fundamental strength of our global business,” The CEO explained.

I am incredibly proud of the way that our team, our customers and suppliers have worked together during this period,” Tim stated.

TWE shares closed 12.3 per cent in the green to trade for $12.85 each at market close.

TWE by the numbers
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