Treasury Wine Estates says it will divest its Commercial brands portfolio and register a $290 million non-cash impairment after tax against its Treasury Premium Brands (TPB) division, including Wolf Blass, Yellowglen, and Lindeman’s brands.
TWE also announced its unaudited EBITS before material items are expected to be $568.1 million, up 12.8 per cent on prior corresponding period. Its FY24 full year results will be released on 15 August.
TWE said a review of its operating model drove the decision to divest the Commercial portfolio. It will provide a full update on the future of TPB in its FY24 full year results.
The company’s annual impairment testing process review of the carrying value of the group’s assets spurred the divestment decision. The non-cash impairment charge of $354 million ($290 million post tax) will be recorded in its FY24 results.
The impairment will be treated as a material item and broken down into a write down of goodwill ($115 million) and brands ($229 million). The brands affected will be 1996 acquisitions Wolf Blass and Yellowglen, and Lindeman’s (acquired in 2005) and Blossom Hill (2015).
TWE said the brands contributed less than five per cent of the group’s gross profit.
The difficult operating environment for commercial grade wines has been well documented across the industry, as the market has changed tack to a premiumisation strategy.
TWE said its Premium brand portfolio - including Wynn’s, Pepperjack, Squealing Pig, and 19 Crimes - has delivered a three-year NSR compound annual growth rate of 10 per cent.
(Explainer: Luxury segment: wines $30+, Premium: $10-30, Commercial: below $10)
