Treasury Wine Estates Posts 7% Revenue Growth, But FY26 Profit Forecasts Cut
Treasury Wine Estates reported robust fiscal 2025 results driven by luxury wine growth and acquisitions, yet has downgraded its fiscal 2026 earnings outlook due to weakening demand in China and distribution disruptions in California.
- Fiscal 2025 net sales revenue rose 7% to $2.9 billion
- EBITS increased 17% to $770 million, with luxury portfolio now 85% of earnings
- Penfolds growth slowed by softening Chinese market consumption
- Distribution transition in California disrupts Treasury Americas shipments
- FY26 earnings guidance withdrawn; share buy-back paused amid uncertainty
Strong Fiscal 2025 Performance
Treasury Wine Estates (TWE) closed fiscal 2025 with impressive financial results, underscoring the success of its luxury-led transformation strategy. Net sales revenue (NSR) grew 7% to $2.9 billion, while earnings before interest, tax, and significant items (EBITS) rose 17% to $770 million. The luxury wine portfolio now accounts for 85% of group earnings, reflecting a clear shift towards higher-margin products.
Key contributors included the Penfolds brand, which expanded its footprint in China and other Asian markets, and the full-year integration of DAOU Vineyards in the Americas. NSR per case increased by 10%, and the company’s return on capital employed (ROCE) improved to 11.9%, signaling enhanced operational efficiency.
Sustainability and Leadership Transitions
TWE also highlighted significant progress on sustainability fronts, achieving 100% renewable electricity across global operations and installing smart water meters at all high- and medium-risk sites. The company reported a 40% reduction in serious safety incidents and increased female representation in senior leadership to nearly 48.4%.
On governance, the board welcomed three new independent directors with expertise in luxury and consumer goods, while preparing for a leadership transition as Sam Fischer is set to succeed Tim Ford as CEO. Ford’s 14-year tenure included guiding TWE through transformative growth phases.
Challenges and Revised Outlook for Fiscal 2026
Despite the strong FY25 results, TWE’s outlook for fiscal 2026 has been tempered by emerging headwinds. The company reported weaker-than-expected consumption trends in China, particularly affecting Penfolds, due to evolving alcohol consumption patterns and softer demand during key festivals.
Additionally, the transition of distribution in California, one of Treasury Americas’ key markets, has disrupted shipments and inventory management. Negotiations with the former distributor RNDC are ongoing, but uncertainty remains regarding the financial impact and timing of resolution.
Consequently, TWE has withdrawn its previous guidance for low to mid double-digit EBITS growth for Penfolds in FY26 and FY27, as well as modest EBITS growth for Treasury Americas. The group-level EBITS growth guidance for FY26 has also been suspended. In light of these uncertainties, the company has paused its on-market share buy-back program to preserve capital flexibility.
Looking Ahead
While near-term challenges persist, TWE remains confident in its long-term fundamentals, supported by a strong balance sheet, premium brand portfolio, and disciplined execution. The company is actively exploring opportunities to reallocate product to other markets and is focused on navigating the evolving landscape with strategic agility.
Bottom Line?
TWE’s strong FY25 momentum faces a test as it recalibrates expectations amid shifting market dynamics and distribution challenges.
Questions in the middle?
- How will TWE manage the ongoing distributor transition impact in California?
- What strategies will TWE deploy to regain momentum in the Chinese luxury wine market?
- When might TWE resume its share buy-back program given current uncertainties?
