Treasury Wine Estates (TWE) has taken a further $558.4 million hit on the winding back of its operations in the US, with total write-downs surpassing $1.2 billion.
The Penfolds owner told investors in June that it plans to significantly reduce its brand portfolio while exiting from underperforming assets. The focus for this cost-saving protocol was centred on its underperforming US market.
“As we announced in June, we are taking proactive and decisive action to align supply to a rigorous model of future demand against the backdrop of an evolving US wine market,” TWE CEO Sam Fischer said.
That will see the company reduce its annual grape intake, with $137 million of the write-down to come from asset divestments. The news of these write-downs was accompanied by an expected, above-forecast full-year earnings figure of $492 million.
“Both our ascent transformation program and strategic review of potential options for the future of our US business are progressing well,” Fischer added.
“The underlying momentum in our business remains positive, with our key brands delivering depletion growth ahead of their categories, led by Penfolds, Daou and Frank Family Vineyards, and we expect to report [full-year earnings] ahead of the guidance we shared in June.”
TWE’s fiscal first-half earnings disclosure shared a near-$650 million loss on the balance sheet, with sales declines seen in all of its markets. The company believes that it will return to growth by the 2028 financial year.
