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Highlights

  • FY25 EBITS guidance reaffirmed at $770 million, up 17% year-on-year.

  • Luxury brands Penfolds and DAOU continue to drive segment growth globally.

  • Company signals upcoming on-market share buyback of up to 5% of issued capital.

Shares of Treasury Wine Estates Ltd (ASX:TWE) surged 6% to $8.57 on Tuesday morning after the company released a market update outlining steady earnings expectations, momentum in luxury wine sales, and plans for a share buyback.

In its investor update, the global wine company reaffirmed its earnings before interest, tax, and SGARA (EBITS) guidance for FY25 at approximately $770 million, representing a 17% increase over the prior financial year. 

The company’s luxury wine division remains a core growth driver, with its flagship Penfolds brand expected to achieve low double-digit EBITS growth in FY25. Treasury highlighted the performance of Penfolds in Asian markets, aided by the reintroduction of the Australian country-of-origin portfolio in China, where demand has rebounded.

Meanwhile, the Treasury Americas division is set to deliver EBITS growth, largely due to the performance of DAOU Vineyards, which is projected to contribute low double-digit net sales revenue growth in line with medium-term expectations. However, other areas within the Americas portfolio continue to face headwinds. The company cited economic uncertainty and subdued consumer demand, especially in the sub-US$15 price segment. This pressure has impacted performance across the premium tier, with brands such as 19 Crimes falling short of expectations.

Looking ahead to FY26, Treasury Wine revealed plans to implement a new luxury-led operating structure, aimed at better aligning its portfolio and market execution strategies. This will include the launch of a new global premium division named Treasury Collective, which will manage a unified range of premium brands across geographies.

Management expects continued EBITS growth in FY26, led by the luxury portfolio. Penfolds is forecast to post low to mid double-digit EBITS growth, with plans to increase investments in marketing and sales, particularly across key Asian markets. DAOU is also expected to contribute meaningfully under the new divisional model.

Adding to investor enthusiasm, Treasury Wine flagged its intention to launch an on-market share buyback of up to 5% of issued capital, with further details to be disclosed alongside its full-year FY25 results in August. The proposed buyback is consistent with the company’s capital management framework, which targets maintaining leverage at around 2.0x and will be supported by projected free cash flow in FY26.