The Treasury Wine Estates Ltd (ASX: TWE) share price is in focus today after the company reported a 39.6% drop in EBITS to $236.4 million, meeting previous guidance. Statutory net profit after tax (NPAT) swung to a $649.4 million loss due to a significant non-cash impairment, while underlying performance of key brands remained positive.
What did Treasury Wine Estates report?
- Net Sales Revenue (NSR) fell 16.0% to $1.3 billion.
- EBITS dropped 39.6% to $236.4 million; EBITS margin shrank to 18.2% from 25.3%.
- NPAT before material items and SGARA was $128.5 million, down 46.3%.
- Statutory NPAT loss of $649.4 million, reflecting a non-cash impairment of US-based assets.
- Cash conversion reached 82.4%; net debt to EBITDAS (leverage) at 2.4x.
- Interim dividend suspended for FY26 to prioritise capital preservation.
What else do investors need to know?
Treasury Wine Estates is taking steps to respond to softer trends in the US and China by actively reducing customer inventory holdings and restricting shipments linked to parallel import activity. The company finalised an agreement with US distributor RNDC for the closure of its California operations in 2025, which includes an inventory repurchase and compensation arrangement.
The TWE Ascent transformation program remains a core focus, targeting $100 million in annual cost savings over 2-3 years. The company expects to deliver these benefits through changes to its brand portfolio, operating model, and cost optimisation, with more details to come at the June 2026 investor day.
What did Treasury Wine Estates management say?
Chief Executive Officer Sam Fischer said:
Today’s results come at a time when we are already making meaningful progress with the decisive actions required to return TWE to a path of sustainable, profitable growth. Our focus is firmly on the future to strengthen execution and ensure we build a stronger, more resilient business for the long term.
TWE Ascent is the key enabler of this reset. It is a disciplined, multi-year transformation program designed to sharpen our portfolio, simplify the organisation and optimise our cost base, and I am pleased with the progress we have made to date.
Encouragingly, we are seeing our key brands continue to perform in the marketplace and resonate strongly with consumers, reinforcing confidence in the strength of our portfolio and our ability to deliver improved performance as we execute the transformation of the business.
What’s next for Treasury Wine Estates?
Looking ahead, Treasury Wine Estates is prioritising efficient execution across markets, focusing on cash flow and accelerating the benefits of the TWE Ascent program. The company expects its second-half EBITS to exceed the first half, aided by improved momentum in California as distribution transitions are completed.
Management has suspended the interim dividend to preserve capital and further reduce leverage, with an eye towards resumption depending on the pace of financial performance improvement. Full-year leverage is expected to rise modestly due to lower earnings and reduced cash conversion, but the company remains confident in its strategy to build a more resilient future.
Treasury Wine Estates share price snapshot
Ove the past 12 months, Treasury Wine Estates shares have declined 52%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.
The post Treasury Wine Estates posts $649.4m loss, suspends dividend as transformation accelerates appeared first on The Motley Fool Australia.
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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.