He said the complete withdrawal of guidance for Penfolds showed “the high level of uncertainty caused by evolving consumption dynamics in the Chinese market”.
Loading
The downbeat outlook from Treasury was accompanied by a pause in the $200 million buyback, announced in August. Only $30.5 million worth of shares had been bought so far.
“As is appropriate and prudent, the on-market share buy-back will be paused until there is greater clarity around trading conditions and expectations,” the company said.
Compounding the problem for the company are the headaches it faces with the distribution of its products in the US market. Treasury has been looking for a new distributor in the US after a key player, Republic National Distributing Company, in June said it would stop operations in California from September.
Treasury at the time said RNDC’s decision would not hurt the business. But on Monday, the company said that moving from RNDC to a new distributor would hurt sales by around $50 million this year.
“The net financial impact from the Californian distribution change remained uncertain. However, it could advise at that point in time that it expected an adverse impact to Treasury Americas’ F26 operating plan net sales revenue of approximately $A50m, reflecting the difference in business plans under the distribution arrangement with RNDC and that with its new Californian distributor, Breakthru Beverage Group.”
Treasury Wines will hold its annual general meeting this week. The meeting will be the last one under the tenure of chief executive and managing director Tim Ford, who will be replaced by Sam Fischer, a former boss of local beer and spirits group Lion, on October 27.
The latest doubts around Chinese demands will add to Fischer’s workload. The company is resigned to holding on to its lower-priced wine brands, Wolf Blass, Lindemans, Yellowglen and Blossom Hill, after failing to find a buyer at an acceptable price.
The wine giant in August said it was planning to sell the commercial wine brands, but lowball offers from potential buyers forced it to reconsider the sale.
Ford in February ruled out the possibility of axing the brands, saying that “maintaining commercial brands strategically is not our plan. However, we couldn’t get a financial outcome to sell those brands, so we’re responsible to make the decision to maintain them”.
Ford’s comments in February came after he had unveiled a 32.5 per cent lift in statutory net profits to $220.9 million for the first half of the 2025 financial year, driven by the removal of China’s punitive tariffs on Australian wine.
With Jessica Yun and Bloomberg
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
