Treasury Wine Share Price Jumps on US Opportunity and FY24 Guidance Update

Highlights:

• Significant US Growth Potential: Treasury Wine Estates highlighted substantial growth opportunities in North America, particularly through its DAOU Vineyards acquisition, which strengthens its luxury wine portfolio.
• Strong FY 2024 Guidance: The company reaffirmed its mid-high single-digit EBITS growth expectation for FY 2024, projecting Treasury Americas' EBITS between $223 million and $228 million.
• Positive Future Outlook: Management anticipates DAOU will be earnings per share accretive and expects average annual low double-digit NSR growth over the medium term, with further updates on the global portfolio strategy due in August.

Significant US Opportunity

Treasury Wine Estates Ltd (ASX: TWE) shares surged 5% to AU$11.97 this morning after a promising update. The wine giant held an investor and analyst event at its newly acquired DAOU Vineyards property in Paso Robles, USA. Management highlighted the significant growth potential in North America, emphasizing that the DAOU acquisition has positioned Treasury Americas as a leading luxury wine business in the US.

The acquisition fills a crucial gap in the AU$20 to AU$40 per bottle range and enhances the existing luxury portfolio above $40 per bottle. Management also noted the value creation potential by leveraging the strengths of both Treasury Americas and DAOU. This has set the stage for a potential standalone Treasury Americas Luxury division alongside Penfolds.

FY 2024 Guidance Update

Treasury Wine Estates reaffirmed its guidance for FY 2024, further boosting its share price. The company expects mid-high single-digit EBITS growth at a group level, excluding DAOU's contribution in the second half.

For Treasury Americas, FY 2024 EBITS is projected between AU$223 million and AU$228 million, driven by luxury portfolio growth and stable premium portfolio revenue. DAOU EBITS is anticipated to be approximately AU$24 million, aligning with expectations.

Positive Outlook

Management's outlook for DAOU remains positive, expecting it to be earnings per share accretive (pre-synergies) and mid to high single-digit earnings per share accretive in the first full year of ownership. Over the medium term, they anticipate average annual low double-digit NSR growth.

The company is also assessing the future operating model for its global portfolio of premium brands, with an update expected in August.

In summary, Treasury Wine Estates' strategic acquisition and strong FY 2024 guidance have generated investor confidence, reflected in the rising share price. The company’s proactive steps in the US market and commitment to growth underscore its robust position in the global wine industry.

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