Treasury Wine Estates (TWE) has reported a loss of $649.4 million in its 1H26, due to the large non-cash impairment of $770.5 million against its US business and ongoing challenging market conditions. It suspended its interim dividend as it looks to preserve capital wherever it can.
For the six months ended 31 December 2025, TWE delivered EBITS of $236.4 million and net sales revenue of $1.30 billion, with the result shaped by softer category conditions, deliberate shipment restrictions aimed at protecting Penfolds pricing in China, and disruption linked to the California distribution transition.
TWE said 2H26 EBITS is expected to be higher than 1H26, as California execution improves following completion of the distribution transition.
The impairment reflects more conservative long-term growth assumptions in the US wine category and reduced long-term earnings growth rates within the Treasury Americas and Treasury Collective (Americas) cash generating units.
Snapshot
- Net Sales Revenue (NSR): $1297.7m, down 16%, with reduced shipments versus the pcp across all divisions;
- NSR per case: $130.5m, down 5.1%, driven by portfolio mix in Penfolds and Treasury Americas;
- Gross Profit: $595.5m, down 18.9%;
- Gross Profit Margin: 45.9%, down 1.6ppts versus the pcp, driven by portfolio mix;
- EBITS margin 18.2%, down 7.1ppts versus the pcp; and
- Net Profit After Tax before material items and SGARA: $128.5m, down 46.3%.
On the balance sheet, net assets fell by $930.9 million to $3870.9 million over the half. Intangibles dropped $979.6 million, while net borrowings (including lease liabilities) rose $91.2 million, reflecting lower operating cash flows partly offset by FX revaluation of USD debt.
TWE suspended the FY26 interim dividend (pcp: 20cps), describing it as a temporary measure to preserve capital and reduce leverage.
Net operating cash flow fell 38.1 per cent to $264.6 million and cash conversion was 82.4 per cent (down 8.0ppts). Capex was $76.8 million in 1H26 and full-year capex is expected to be about $125 million, reflecting completion of projects in progress.
The capital preservation stance follows recent commentary from the company that customer inventory levels in China and the US were above optimal and that parallel import activity was disrupting Penfolds pricing, an issue again emphasised through the half-year period and reflected in shipment decisions.
Penfolds protects brand equity
Penfolds delivered 1H26 EBITS of $201.0 million, down 19.6 per cent, as TWE cycled elevated China shipments in the prior period and restricted shipments contributing to parallel import activity (including impacts in Asia ex-China and Australia).
Despite shipment cuts, TWE pointed to continued demand, with Penfolds depletions up 17.2 per cent in China and 3.5 per cent in Australia (Aug–Dec vs pcp).
As part of its two-year inventory reset, TWE said reducing customer inventory holdings in China by ~0.4 million cases (about $215 million NSR value) remains a key priority.
TWE maintained its full-year expectation for Penfolds EBITS of approximately $400 million, with an EBITS margin around 40 per cent.
Treasury Americas
Treasury Americas’ result reflected the toughest trading conditions. EBITS fell 63.6 per cent to $44 million and NSR dropped 28.4 per cent, with TWE citing softer US wine market conditions, disruption from the California distribution transition, and cycling the prior period’s excess of shipments over depletions.
While total US depletions declined 2.6 per cent (driven by California), depletions outside California grew 1.8 per cent, led by DAOU (+2.6%), Frank Family Vineyards (+8.4%) and Stags’ Leap (+6.1%).
Treasury Collective
Treasury Collective reported EBITS of $28.1 million, down 51.1 per cent, reflecting softer US conditions, California transition impacts, and customer inventory reduction, while Australia and EMEA traded in line with expectations, supported by growth and innovation brands.
RNDC settlement, inventory repurchase
A key near-term operational issue for TWE has been the fallout from Republic National Distributing Company (RNDC) closing its California operations.
TWE reached a settlement with RNDC under which it will repurchase Treasury Americas and Treasury Collective inventory held by RNDC in California at original sale value net of a confidential settlement. Taking account of expected on-sale to other customers commencing this half, TWE expects a net cash outflow of approximately US$65 million in 2H26.
