Australian Vintage Ltd (AVG) Earnings Call Transcript & Summary

Good morning, everyone, who's online. My name is Craig Garvin, and welcome to the AVG update presentation. We will take the press release is read and I will go through with the investor deck. Could I ask that everyone who's online, please don't unmute. In the room, Craig Garvin, myself, I'm the CEO of AVG; we have Adam Rigano, who is the CFO, and we have the senior leaders here on the call. And welcome to you all. Let me start by saying we're pleased with the performance of doing business. We're now strategically on track with where we want to go to, and that is, moving from an offline business a few years ago [indiscernible] joined by global brands, markets and premiumization. Our innovation is working well, and we continue to grow share in the key markets as we planned. We've navigated through COVID in a very structured and confident way and our margins are improving. Like all businesses, there are headwinds on the horizon. There's always been headwinds in the '22 result, which we managed to offset across the board through various measures that we'll talk about. Our innovation is delivering across our business. We're the leaders in no-and-low alcohol, but you'll also see some exciting initiatives around the alcoholic drinks and beverages on top of our core brands. Acquisition is always on the agenda for us. We've got a very strong balance sheet, and we're very positive about that. And we're pleased that over the last 3 years, our TSR growth is 80% from 1st of July '19. We are also seriously engaged in our ESG road map and we'll talk about the journey to net zero by 2040. On to Adam for financial highlights.

Thank you, Craig, and hello to everyone on the call today. EBITS -- underlying EBITS, underlying EBITDAS and underlying NPATS are all up 7% over the prior year. And that's despite in our underlying numbers we included inflationary pressures of about $4.6 million that I'll touch on a little bit later in the presentation. The difference between that and our reported numbers are the one-off nonrecurring costs that we highlighted in the first half associated with COVID, cellar door closure in Australia and demurrage and stock outs in U.K. [indiscernible] about another $4.5 million of [indiscernible]. SGARA was low. We took a hit in SGARA on the back of the overarching [indiscernible], impacting grape prices which [indiscernible] around about $0.7 million. So we'll talk about that a little bit later in the deck. EPS $0.069 per share in line with the prior year. The Board has declared a dividend of $0.034 per share based on the results that we had, franked to 60%.

Thank you, Adam. Very important [indiscernible] when we talk about the nonrecurring one-off, that was absolutely Brexit-related. When we talk about demurrage in the U.K. and out of stocks, it was solely to do with Brexit. Ongoing inflationary costs, we'll talk about later, are not one-offs and called out separately. If I talk about our behaviors, our values, our mission and our purpose, as we skip to the next page, we're very strongly focused on our internal behaviors, living our values as a corporation and ensuring that all remuneration is linked to behaviors and values across our business. That's driving discretionary effort from our staff and high engagement, which we'll talk about soon. Somebody who's just come in has not unmute and it's very noisy, if you wouldn't mind just going to mute please. Okay. If I look at our strategic scorecard here and the headings associated, we are investing heavily in pillar brands. Despite the headwinds, we haven't pulled back. It's really fundamental to our long-term strategic plan. Our pillar brand portfolio, therefore, is in double-digit growth, and we're winning share in all markets. Even in the U.K., where the market declined post COVID, we actually have won share at a rate of 2:1 over the market, which is excellent. We've also launched new brands in the U.K. market. Tempus Two in the top 30 fastest-growing brands and much more to come. I want to be clear about, we will not hold back on our marketing investment over the coming years because it's core in the essence of being a branded business and driving high-margin products. Markets and customers. We've significantly improved our business in Australia and the U.K., and we're now starting to see new business growth in Asia and North America, more about that later. We were just rated the #2 customer in alcohol supply in the country under the Advantage Survey, which we take with great pride. It was only 3 years ago, we were outside the top 10. So you can see that the business is driving down store count across the board. Joint business planning is delivering for us globally, and we're very consistent now, not only with our brands but our methodologies and how we go to market. People are the essence of our business and our greatest asset. Staff engagement is now at 70%, which is top quartile, best in employer categories. So we're very proud of that. Diversity in behaviors, we continue to invest in new brands. And if you look at that total people column, we won the most improved gender equity award, which we're also very proud of. They all add up driving ownership and discretionary effort of our staff, which we believe is strategically based. We have to be nimble. We have to be quick, and we have a highly competitive market that we play in. Moving on to ESG. Climate action towards the net zero. We are about net zero by 2040 and we'll achieve that. We're transitioning to renewables across our business. We're pretty well down on track on that, too, I have to say.

The host has ended this conference. You will now be disconnected. Thank you.