Treasury Wine Estates (TWE) has confirmed about $50 million in proceeds from the sale of non-priority brands and assets, including Seppelt, Rosemount and a number of vineyards, as it works through its Ascent transformation program.
Speaking at the company’s AGM in Melbourne on 15 October, CEO Sam Fischer said further divestments were being finalised and were expected to be signed by the end of the first half of F27.
Ascent is targeting $100 million in annual cost reductions by F29. Initiatives to deliver $40 million of that in F27 have been actioned.
US supply chain
In the US, TWE is reducing grower intake, fallowing vineyards, reducing winemaking capacity and divesting surplus assets to address what Fischer called “structural misalignment” in its supply chain. Intake has been reduced for the 2026 US vintage.
A strategic and operational review of the Americas business is under way, with advisors appointed to assess options across the brand portfolio, operating model and asset base. Chair John Mullen said the review would be completed this financial year.
TWE’s US operations were hit in F26 by the bankruptcy of its largest US distributor, RNDC. The remaining markets will move from RNDC to new distributors this month.
F26 result and leverage
TWE reported a statutory net loss after tax of $1.1 billion for F26, driven by a non-cash impairment of US assets. Net sales revenue fell 12.8 per cent to $2.6 billion, EBITS fell 36.1 per cent to $492.3 million, and net profit after tax before material items fell 41.5 per cent to $275.3 million. The EBITS margin dropped seven percentage points to 19.2 per cent.
Mullen said the result reflected weaker conditions for alcoholic beverages, the RNDC collapse, and a sharp fall in Penfolds depletions in China after changes to large-scale banqueting, as well as action against parallel imports. Together these left excess inventory.
Leverage, measured as net debt to EBITDAS, was 2.8 times at the end of F26 and fell to 2.7 times in the first quarter on operating cash flow. TWE expects to return below its 2.0 times target by the end of F28, excluding divestment proceeds. The dividend remains suspended until leverage moves towards the target.
First quarter trading
First-quarter trading was in line with plan across all regions, according to TWE. Penfolds depletions in China were slightly ahead of plan. In the US, depletions grew across its Power Brands and Regional Heroes, led by DAOU, Frank Family Vineyards and Matua, the luxury portfolio’s third consecutive quarter of depletions growth. In Australia, Power Brand depletions growth was led by Penfolds. Customer inventory cover fell in China and the US.
TWE moved to a regional operating model this month, with Greater China, Emerging Markets, Australia and New Zealand, Europe, and the Americas.
“We’ve taken decisive action over the past year to sharpen our focus on where we compete, the brands we invest in, and how we operate. We’re already seeing stronger sales across our priority brands in key markets, and we’re determined to build on that progress,” TWE CEO, Sam Fischer, said.
TWE expects F27 EBITS to be at least equivalent to F26, with about 55 per cent weighted to the second half. Its long-term EBITS margin target remains 25 per cent or more.
