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Treasury Wine Estates’ $200m spend on SA winery

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The world’s largest publicly listed winemaker has announced a huge investment in a winery northeast of Adelaide.

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Australia-based Treasury Wine Estates told investors this morning that it would spend up to $215 million at its Wolf Blass Bilyara winery site near Nuriootpa, about 70 kilometres northeast of Adelaide, over the next 24 months.

The funds will be pumped into expanding production, processing and storage infrastructure at the facility.

Treasury – which owns Penfolds, Wolf Blass and Rosemount Estates – also unveiled a $419.5 million full-year net profit this morning.

The figure is 16 per cent higher than last year.

In a statement to the Australian Stock Exchange, the company said the infrastructure spend at Bilyara winery would increase its winemaking capacity, drive production efficiency and expand its storage capacity.

“The investment includes an additional production line, processing infrastructure and the construction of additional barrel storage facilities,” the report says.

“Total capital investment is expected to be between $150 million and $180 million and will be incurred over the course of (financial year 2020) and (financial year 2021).

“In addition, one off costs of approximately $35 million are expected to be incurred in FY20.”

The wine giant says the investment is part of its continuing “premiumisation strategy”, which also includes buying production and vineyard assets in the Bordeaux region of France.

The company’s total revenue rose 15.5 per cent to $2.88 billion for the 12 months to June 30 and the lifted its fully franked final dividend by 3 cents to 20 cents.

“Today’s results confirm the positive momentum in our business which is being delivered through our premiumisation strategy, the disciplined investments we have made in our business over recent years and importantly, exceptional execution by our global team,” chief executive Michael Clarke said.

Strong growth in Canada and Latin America helped bolster earnings before interest and tax in the Americas to $218.7 million, while increased availability of luxury and masstige offerings in Asia drove its earnings up 43 per cent to $293.5 million.

Treasury Wine Estates says its new distribution network in the US was performing well, with further benefits expected in full-year 2020 results as the new model was refined and built momentum.

– with AAP

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