Treasury Wine Estates unveils $100m cost-out plan amid downturn in US, China

Treasury Wine Estates has unveiled an overhaul program targeting $100 million a year in savings, as weakening demand in the US and China dampens earnings.

At the same time, Australia’s biggest vintner has cancelled its $200m share buyback, first announced at the full-year results in August.

In an investor update on Wednesday, TWE said it now expected first-half earnings before interest and tax of between $225m and $235m.

TWE’s share price plunged 11.5 per cent to $4.86 just after 10am AEDT.

The company is behind the famed Penfolds brand, along with 19 Crimes, Wolf Blass, Lindeman’s, Spealing Pig, Blossom Hill and Wynns labels.

“We are currently experiencing category weakness in the US and China, two of our key growth markets, which will impact our business performance in the near-term,” new group chief executive Sam Fischer said.

Treasury said it would take “deliberate strategic action to ensure the strength of its brands and health of its sales channels”.

It’s now implementing an organisation-wide transformation program, called TWE Ascent, which will target $100m in cost improvements per year. Most benefits will not start flowing until the 2027 financial year and beyond.

It comes just over two weeks after TWE told shareholders it would write down the value of its Americas business by $687.4m because of a forecast 11 per cent yearly decline in future cash flows.

The non-cash impairment was “in response to further moderation in US wine category trends”.

More to come.