Treasury Wine lifts on plan to divest commercial brands
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More news: Shares in Treasury Wine Estates were up 1.6% to $11.78 in early trading after Australia’s top winemaker said it planned to divest lower-end commercial brands, including Wolf Blass, Yellowglen, Lindeman’s, and Blossom Hill.
The winemaker, which gets three-quarters of its earnings from high-end wines like Penfolds, pushed deeper into the premium segment with the acquisition of California-based DAOU last year but has struggled at the lower end of the market as cost-of-living pressures have weighed on consumers.
Treasury Wine to divest commercial brands, outlines impairments
The news: Australia’s top winemaker Treasury Wine Estates has announced a hefty impairment in its upcoming full-year results and outlined plans to divest its lower-end brands.
The numbers: The group will take a pre-tax non-cash impairment charge of $354 million ($290 million post-tax) in its full-year results to be announced on 15 August. The impairment relates primarily to the write-down of goodwill and predominantly commercial brands, including Wolf Blass, Yellowglen, Lindeman’s and Blossom Hill.
The company also expects full-year earnings to be $658.1 million, an increase of 12.8% on the previous year.
The context: The winemaker, which gets three-quarters of its earnings from high-end wines like Penfolds, has pushed deeper into the premium segment with the acquisition of California-based DAOU late last year. But it has struggled at the lower end of the market as cost-of-living pressures have weighed on consumers.
Treasury said on Tuesday the changes to the carrying value of its brands reflected the moderated top-line expectations as a result of challenging market conditions for commercial wine across all markets and the underperformance of its TPB division brands relative to the category. Following a review of its global portfolio, TWE will seek to divest its commercial brand portfolio, which mainly includes brands below the $10 price point and which make up less than 5% of the group’s gross profit, it said.
The source: ASX
