Treasury Wine shares rally on distributor settlement
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More news: Treasury Wine Estates was one of the best performing ASX 200 companies in morning trade after reaching a settlement with US distributor Republic National Distributing Company over the closure of its California operations last year.
Shares were up 6.1% to $5.49 at 11:55am AEDT. The stock is down around 50% over the last 12 months.
Treasury Wine settles US distributor dispute, flags $92m hit
The news: Treasury Wine Estates has reached a settlement with US distributor Republic National Distributing Company (RNDC) over the closure of its California operations last year.
The context: As part of the settlement agreement, Treasury Wine will repurchase portfolio inventory held by RNDC in California for its original sale value, net of a confidential settlement that compensates the winemaker for the impact of RNDC's closure in the state.
Treasury Wine expects to report a net cash outflow of USD65 million ($91.7 million) relating to the settlement agreement.
The company will continue to partner with RNDC to distribute its portfolio across a number of other US markets. However, Treasury Wine reiterated plans to reduce distributor inventory levels outside of California over the next two years, as announced in December.
The group now expects first-half earnings to be $236 million, above the $225-$235 million guidance range issued in December.
What they said: "Although RNDC's decision to exit the Californian market had a significant impact on our performance in 1H26, we are pleased to have reached this resolution with RNDC, who remain a committed and high performing partner for [Treasury Wine] across a number of other US markets," said Treasury Wine CEO Sam Fischer.
The source: ASX
