Highlights

  • Weak category conditions in the US and China lead to moderated near-term depletion expectations.
  • 1H26 Group EBITS guided at AUD 225m–235m, with higher earnings anticipated in 2H26.
  • Leverage projected near 2.5x at 1H26, remaining above target range for two years.

Treasury Wine Estates Limited (ASX:TWE) has released an investor update outlining revised performance expectations amid weakening category dynamics, particularly in the US and China. The company stated that near-term improvement in these markets is now unlikely, resulting in moderated depletion growth expectations. Customer inventory holdings in both regions are assessed as above optimal levels, while parallel import activity continues to disrupt pricing in the China market, particularly for Penfolds.

To address these conditions, Treasury Wine Estates plans to deliberately reduce customer inventory holdings in the US and China to align with revised demand expectations. In China, shipments contributing to parallel imports will be significantly restricted to limit pricing disruption.

Earnings guidance and divisional impacts
Group EBITS for 1H26 is expected to be in the range of AUD 225m to AUD 235m, excluding any benefit from a potential settlement with RNDC. The second half of F26 is expected to deliver higher EBITS than the first half, which was affected by the California distribution transition.

Penfolds is expected to record approximately AUD 200m in EBITS in 1H26, with earnings broadly balanced across the fiscal year. While depletions continue to grow in China, Asia ex-China, and Australia, growth rates are now expected to be lower than previously planned. Distributor inventories in China are set to be reduced by around 0.4m cases, equivalent to AUD 215m in NSR value, over a two-year period starting in 2Q26.

Treasury Americas is expected to deliver approximately AUD 40m in EBITS in 1H26. Depletions growth outside California continues, but overall performance has been impacted by weak conditions in California and ongoing distribution changes. Distributor inventories outside California are expected to be reduced by 0.3m cases, representing AUD 125m in NSR value, over approximately two years. The expected run-rate benefit from DAOU synergies in F26 has been revised to around USD 20m.

Treasury Collective is forecast to deliver around AUD 25m in 1H26 EBITS. Performance in Australia and EMEA remains in line with expectations, while the US Premium wine segment continues to decline. US tariffs on wine produced in Australia and New Zealand are expected to reduce Treasury Collective EBITS by approximately AUD 10m.

Inventory, balance sheet and capital structure
Moderated demand expectations are expected to increase Luxury inventory levels on the balance sheet. In Australia, future grape intakes will be adjusted lower from the 2026 vintage, with inventory balance targeted over two to three vintages. In the US, changes to the production network may be required due to higher exposure to owned and contracted vineyards.

Leverage is expected to remain above the 1.5x–2.0x target range for around two years, with leverage projected at approximately 2.5x at 1H26. The previously announced on-market share buyback of up to AUD 200m in F26 has been cancelled, while liquidity and debt maturity profiles remain diversified.

Share Price Snapshot
TWE was trading 8.65% lower at AUD 5.015 per share as of 17 December 2025.