Treasury Wine Estates reported a statutory loss over $1 billion, paid no dividend, yet beat its own earnings guidance all in the same result. On this week’s Switzer Show, a fund manager who has been adding the stock says the company is finally “selling the wine”. Time to pop the corks?
Treasury Wine’s year to 30 June, reported on 13 August, reads brutally on first look: a net loss of $1,078.7 million, driven by non-cash write-downs of its US business, including a further $558.4 million charge stemming from a US vintage-make reduction announced three days before the result. The board declared no dividend, against 40 cents the year before. Net sales revenue fell 12.8% to $2.56 billion as the company deliberately shipped less wine. Ouch.
Yet, the shares rose 4.9% on results day. That’s probably thanks to the EBITS of $492.3 million, a result that’s ahead of the company’s own $480 to $490 million guidance range, driven by Penfolds, which alone delivered $404.3 million of earnings at a 40.5% margin. Chief executive Sam Fischer’s line in the results: “Penfolds, once again, proved it is a global luxury wine brand that transcends the wine category.”
All about inventory
The rivers of wine are finally flowing, it seems, out of TWE’s warehouses and into the glasses of drinkers as opposed to just sitting in warehouses. In China, the company cut customer inventory cover by about 0.2 million cases, ahead of the 0.15 million it had guided to, “due to strong depletions performance in May and June”, with the rest of a 0.4 million case reduction to complete in FY27.
Penfolds depletions (the industry’s word for wine actually sold through to consumers) rose 34.7% in China, though TWE notes about half of that came from steering parallel imports into authorised channels. In the Americas, shipments outside California ran in line with depletions, which grew 4.2%.
On this week’s Switzer Show, Jun Bei Liu, founder and lead portfolio manager of TenCap, made exactly that argument.
“This is another company we added. We added more during the reporting season… Actually we have a lot more confidence the company is finally seeing green shoots. Now, there’s still a lot of restructuring happening in the US, but what we see is that they are selling the [wine]. So the inventories are going down… There are more fresh demand. The China [is] stabilising. So there’s a lot of good things happening. But it doesn’t happen… in one night.”
“We do think that given you’re only paying something like 13 times earnings and a[n] earnings expectation that’s very low… the leverage to the upside is quite meaningful. So I have that one on a buy.”
The multiple is her number, not the company’s, mind you.
Keeping it going
TWE’s guidance for FY27 is EBITS “at least equivalent” to FY26, weighted about 55% to the second half. The first half carries the remaining drag: selling through repurchased Californian inventory at effectively nil margin, progressing the US distributor rebalance (completion is due by the first half of FY28), and the phasing of Penfolds Bin 407 shipments in China.
The company’s Ascent cost program targets $100 million of annual savings by FY29, with about $40 million expected to land in FY27. The shares closed at $5.70 on 24 August, down about 30% over 12 months.
Prices as at the 24 August 2026 close; company figures from TWE’s Fiscal 2026 results announcement of 13 August 2026. This article does not take into account the investment objectives, financial situation or particular needs of any individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances. Before acting on anything we discuss, we strongly recommend you seek the appropriate professional advice.
