Treasury Wine Estates reported a statutory loss driven by a significant US asset impairment but showed underlying growth in key markets. The company suspends its interim dividend and targets $100 million in annual cost savings through its TWE Ascent program.
- 1H26 EBITS of $236.4 million slightly above guidance
- Statutory NPAT loss of $649.4 million due to US asset impairment
- Penfolds depletions up 17.2% in China and 3.5% in Australia
- Suspension of F26 interim dividend to preserve capital
- Targeting $100 million annual cost improvements over 2-3 years
Interim Results Reflect Mixed Fortunes
Treasury Wine Estates (TWE) has released its interim results for the six months ending December 2025, revealing a complex picture of operational resilience shadowed by significant accounting impairments. The company reported earnings before interest, tax, material items and SGARA (EBITS) of $236.4 million, slightly exceeding its December guidance of $225-$235 million. However, a statutory net profit after tax (NPAT) loss of $649.4 million was recorded, primarily due to a non-cash impairment of US-based assets.
This impairment reflects more conservative long-term growth assumptions for the US market, particularly impacting the Treasury Americas and Treasury Collective cash-generating units. The write-down included goodwill and brand values, notably affecting Beringer and Sterling brands.
Underlying Business Momentum and Market Dynamics
Despite the headline loss, TWE’s core business showed encouraging signs. Depletions, a measure of wine sold through to consumers, grew strongly in key markets. Penfolds, the company’s flagship brand, saw depletions rise 17.2% in China and 3.5% in Australia, signalling robust consumer demand. In the US, excluding California, depletions increased 1.8%, driven by premium brands such as DAOU, Frank Family Vineyards, and Stags’ Leap.
However, the US market remains challenging. The transition of Californian distribution, including a settlement with distributor RNDC, has disrupted shipments and contributed to a 63.6% decline in Treasury Americas’ EBITS. TWE is actively reducing customer inventory in the US and China to curb parallel imports and improve channel health.
Capital Management and Dividend Suspension
In response to these headwinds, TWE has suspended its interim dividend for fiscal 2026 as a temporary measure to preserve capital and maintain financial flexibility. The company’s leverage ratio stands at 2.4 times net debt to EBITDAS, in line with guidance, but full-year leverage is expected to rise due to lower earnings and cash conversion.
Liquidity remains strong with $1 billion available and no significant debt maturities until June 2027. The suspension of dividends will be reviewed based on future financial performance and leverage improvements, particularly as benefits from the TWE Ascent transformation program materialise.
TWE Ascent – A Strategic Transformation
TWE is accelerating its TWE Ascent program, targeting $100 million in annual cost savings over the next two to three years, with initial benefits expected from fiscal 2027. The program focuses on simplifying operations, enhancing data analytics, and improving market execution capabilities. It also involves portfolio rationalisation to release capital and strengthen the company’s luxury wine leadership.
Management expresses confidence in the company’s long-term prospects, underpinned by a powerful brand portfolio and ongoing investments in innovation and market activation. Detailed plans and targets for the transformation will be presented at the upcoming Investor Day in Sydney on 4 June 2026.
Outlook
TWE expects second-half EBITS to improve on the first half, driven by stabilisation in California and continued momentum in other markets. The company remains focused on executing its market strategy, managing costs, and progressing its transformation agenda to return to sustainable, profitable growth.
Bottom Line?
TWE’s interim results underscore the challenges of a complex global market but highlight a clear path forward through disciplined cost management and strategic transformation.
Questions in the middle?
- How quickly will TWE’s cost savings from the Ascent program translate into improved earnings?
- What is the outlook for the US wine market post-RNDC distribution transition?
- When might TWE resume dividend payments, and what financial targets must be met first?