By Roshan Thomas
Aug 10 (Reuters) - Australia's Treasury Wine Estates said on Monday it would overhaul its U.S. business by fallowing vineyards, impairing brands and writing down inventory, resulting in a post-tax charge of A$558.4 million ($394.4 million).
Shares of the Penfolds owner rose as much as 7.9% to A$5.86, the highest level since early December 2025, as investors backed the measures and the winemaker said its earnings in the 12 months ended June 30 would top its previous guidance.
The U.S.
decisions stemmed from a strategic review of its Americas business launched in June after lower demand left the division with excess supply-chain capacity and elevated inventory levels.
Softer consumption and excess supply are weighing on winemakers globally.
As part of the overhaul, Treasury Wine said it would reduce North Coast vintage make sizes from 2026, including by fallowing vineyards to lower grape intake, prompting asset writedowns across its U.S. network.
The Melbourne-based company also said it would write down inventory, predominantly bulk wine, which it expects to manage through sales into bulk wine markets and internal reclassification.
The brand impairment primarily relates to DAOU, Frank Family Vineyards and Beaulieu Vineyard following a review of asset carrying values as of June 30.
The charge is incremental to an impairment recognised in the first half of the 2026 financial year, the company said.
"Investors appear encouraged by decisive action on a long-standing issue, while the strategic review preserves flexibility for asset sales and broader U.S. restructuring, supporting a longer-term re-rating thesis," said Marc Jocum, senior product and investment strategist at Global X ETFs.
Despite the charge, Treasury Wine said unaudited earnings before interest, tax, SGARA and material items (EBITS) for the financial year ended June 30 were expected to be A$492.3 million, above its A$480 million to A$490 million guidance range.
The company also reiterated its expectation for fiscal 2027 EBITS to be at least equivalent to fiscal 2026.
RBC Capital Markets described the update as positive overall, noting the earnings result was ahead of guidance and consensus expectations.
The broker added the writedowns were non-cash in nature and reflected necessary supply-chain rebalancing efforts in the United States.
($1 = 1.4158 Australian dollars)
(Reporting by Roshan Thomas in Bengaluru; Editing by Chris Reese, Lincoln Feast and Jamie Freed)
