Treasury Wine Estates (TWE) is facing headwinds as its 1H26 guidance falls short of expectations, according to RBC Capital Markets analyst Michael Toner. The guidance missed RBC and consensus estimates by approximately 30 per cent, signalling a material shortfall for the wine producer. Treasury Wine Estates is an Australian global beverage company that makes and sells wine brands like Penfolds, Wynns Coonawarra Estate, and Beaulieu Vineyard. It is one of the world’s largest wine companies.
The Americas business experienced significant underperformance, reporting EBITS of $40 million compared to RBC’s forecast of $84 million. Furthermore, anticipated DAOU synergies have been reduced from $US30 million to $US20 million. Penfolds also underperformed, with China depletions increasing by 21 per cent compared to the prior corresponding period, though this growth is slower than initially expected for F26. The Collective division also fell short, reporting $25 million EBITS against a forecast of $52 million.
While Treasury Wine Estates anticipates improved EBITS in 2H26, RBC cautions that this still implies substantial downgrades to full-year consensus earnings. In response to these challenges, the company plans to implement $100 million in annual cost reductions through measures such as dividend cuts, non-core asset sales, and a review of capital expenditure. However, RBC warns that these actions may prove insufficient if current trading conditions continue to deteriorate.
The analyst highlights that category dynamics in both the US and China remain challenging. Above-optimal inventory levels have prompted TWE to restrict shipments and reduce customer holdings. According to RBC Capital Markets, a medium-term improvement in trading conditions is unlikely under the current market trends, creating continued uncertainty for Treasury Wine Estates.
