Treasury Wine Estates has reported a loss of $1.08 billion. This follows a $558 million writedown of its US operations announced a few days ago.
The result reflects the struggle and broader troubles in the global wine industry.
The big loss is the result of a decision to cut $1.3 billion from the value of its operations mainly in the US.
Penfolds sales have fallen seven percent for the year.
However, TWE says Penfolds continues to show “strong momentum” with global depletions up and China growth of 34.7 percent.
Earnings before interest and tax were $492.3 million, ahead of the last guidance of $480-$490 million.
Full-year revenue for TWE fell 12.2 percent to $2.63 billion.
CEO Sam Fischer said F26 was a year of decisive action and significant change for Treasury Wine Estates.
“While our financial performance reflected evolving market conditions and the proactive measures to ensure brand and channel health, we made substantial progress towards reshaping the business for long-term success,” he said.
“Penfolds, once again, proved it is a global luxury wine brand that transcends the wine category.
“The growth in depletions globally, led by China, was particularly pleasing, reflecting the continued excellence of our execution and strengthening demand power.
“During the year, we took action to rebalance customer inventories in China and the US to protect brand health, whilst significantly advancing our TWE Ascent transformation program to drive clearer accountability, faster decision making, and an enhanced focus on our highest potential brands.
“We are also making strong early progress in aligning our supply chain to our vision for a simpler TWE, and accelerating initiatives to improve performance in the Americas.
“While there is more to do, we are confident these initiatives will position TWE for improved and sustainable growth over time.”
The company has cancelled dividends and expects zero growth for the rest of the year.
TWE said F26 was a year of decisive action and significant change.
The company said it was entering F27 with improved momentum and clear priorities:
• Continuing above category depletions growth for our power brands and regional heroes,
• Advancing customer inventory rebalancing towards completion,
• Reducing leverage with an elevated focus on cash and working capital,
• Progressing the TWE Ascent transformation, and
• Completing the Americas strategic review.
“We see a bright future for TWE as a more focused, market centred, simpler and financially stronger wine company,” TWE said.
The company has been trying to reduce costs.
In June TWE announced that will reduce its portfolio of 76 brands to less than 30.
The company will focus on the ‘Power Brands’ Penfolds, DAOU and Matua – complemented by ‘Regional Heroes’ including Frank Family Vineyards, Beaulieu Vineyard, Stags’ Leap Winery, Wynns, Squealing Pig, Pepperjack, and Coldstream Hills which will continue to play an important role in key local markets.
TWE expects these 10 brands to contribute around 90 percent of group net sales revenue within five years.
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