Treasury Wine Estates has received a “sell” rating from Citi analysts following a recent trading update that fell significantly short of expectations. The report cited worsening conditions in both the United States and China, a dim outlook, and high inventory levels. Treasury Wine Estates is a global wine company that cultivates grapes, produces wine, and distributes its products worldwide. The company owns a portfolio of brands, including Penfolds, Wolf Blass, and Wynns Coonawarra Estate.
According to Citi, while Treasury Wine Estates’ new chief executive is implementing measures to decrease customer inventory, this approach is expected to temporarily raise gearing to 2.5 times by the first half of FY26. This level is above the company’s target range of 1.5 to 2.0 times and is expected to persist for approximately two years. Treasury Wine Estates aims to achieve $100 million in cost savings between FY27 and FY29.
Earnings guidance was notably lower than anticipated. First-half FY26 EBITS is projected to be between $225 million and $235 million, marking a 31 per cent reduction compared to consensus estimates. The Penfolds, Treasury Americas, and Treasury Collective divisions are all expected to perform considerably below market expectations. Citi also noted that parallel import disruptions are affecting Penfolds’ pricing in China.
