Treasury Wine flags $450 million writedown of US assets, shares hit decade low

By Christine Chen and Sherin Sunny Dec 1 (Reuters) – Australia's Treasury Wine Estates said on Monday it expects to write off A$687.4 million ($449.56 million) from the value of its U.S. assets due to a slowing American wine market, sending its shares to their lowest in more than a decade. Treasury – one of the world's top five winemakers by volume – said moderating U.S. wine sales prompted it to adopt more conservative assumptions about long-term market growth, reducing expected earnings. The writedown will reduce all the goodwill in Treasury Wine's Americas business and could impact other assets, it added. Shares fell as much as 6.4% to A$5.45 in early trade, their lowest level since August 2015, against a largely flat broader benchmark S&P/ASX 200 index. The stock is down more than 50% since the start of the year, placing the company under increasing pressure from investors. New chief executive Sam Fischer, who joined the company in October, will give an update to investors and analysts in mid-December, Treasury said. RBC Capital Markets analyst Michael Toner said the writedown was consistent with Treasury pulling its earnings guidance for 2026 in October. That announcement, due to challenges in the U.S. and China, also sent shares to a decade low. "The announcement is negative in that it reflects increased pessimism by TWE regarding long-term market fundamentals, and reinforces the view that TWE materially overpaid for previously acquired Americas brands," Toner said. Hebe Chen, an analyst at Vantage Markets, said the scale of the writedown heightened the chance management would take a "more cautious approach to February’s dividend as it focuses on stabilising the Americas division". Treasury said that while some of its larger, premium wine brands continued to grow ahead of the market, including Daou, Frank Family Vineyards and Matua, other U.S. wine category trends impacted its Treasury Americas and Treasury Collective units. Treasury previously flagged an 11% annual reduction in future cash flows in its Americas business, reducing impairment headroom to nil. Its U.S. operations have also been disrupted by the exit of its distributor in California, with the transition to a new partner costing around A$50 million in sales. ($1 = 1.5291 Australian dollars) (Reporting by Christine Chen in Sydney and Sherin Sunny in Bengaluru; Editing by Edmund Klamann, Chris Reese and Lincoln Feast)

(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)