Treasury Wine Estates faces China growth concerns amid changing drinking habits
Unveiling its full-year results on Wednesday, Australia's top wine producer flagged a recent shift in alcohol consumption behaviour in China, with less large-scale banqueting and more smaller scale occasion events.
Citi analyst Sam Teeger warned this did not 'bode well' for the rest of the new financial year, with Barrenjoey's Tom Kierath expecting the China commentary to weigh on TWE's shares on Wednesday.
However, the stock was up 3.5 to $7.90 in early trade.
TWE said full-year net profit before material items was 15.5 per cent higher than the previous financial year at $470.6 million.
Earnings grew 17 per cent to $770.3m, driven by its high-end Penfolds label and a full year contribution from its Californian wine operation DAOU. It also announced a share buyback of up to $200m.
Penfolds division earnings rose 13 per cent to $477m, driven by strong growth in its Bin and Icon shipments to China.
Outgoing chief executive Tim Ford said it 'continued to face headwinds in a number of markets'.
Penfolds managing director Tom King later told analysts on a call it had strong plans for the mid-autumn festival in China in October and was 'feeling pretty good around how the initial collection release has gone down in China'.
'I think we've proven over recent years that we're pretty good at adapting to shifting environments,' he said.
'China is a very dynamic market for sure and things can change very quickly.
'We've got levers that we can pull as demand increases and decreases across our global business.'
But Mr Teeger said: 'We think today's incrementally more cautious tone on (China) could lead to some of the China bulls on the stock to moderate their growth expectations.
RBC Capital Markets analyst Michael Toner said a key question was whether the softness observed in China in June and July would persist for the remainder of the financial year.
Treasury Americas delivered a 33.9 per cent lift in earnings to $308.6m, despite slowing sales for the Snoop Dogg-backed 19 Crimes.
Treasury Premium Brands suffered a 27.6 per cent decline in earnings to $55.1m.
TWE is forecasting a $50m hit to revenue this financial year from changes to its wine distribution model in California, with its local distributor ceasing operations later this year.
It declared a final dividend of 20¢ a share.
Mr Ford will leave the company at the end of September to make way for incoming chief Sam Fischer, who was poached from alcohol giant Lion.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
West Australian
2 days ago
- West Australian
Treasury Wine Estates faces China growth concerns amid changing drinking habits
There are 'cracks appearing' in Treasury Wine Estates' China prospects, analysts say, as consumer preferences shift from large banquets to lifestyle-oriented occasions. Unveiling its full-year results on Wednesday, Australia's top wine producer flagged a recent shift in alcohol consumption behaviour in China, with less large-scale banqueting and more smaller scale occasion events. Citi analyst Sam Teeger warned this did not 'bode well' for the rest of the new financial year, with Barrenjoey's Tom Kierath expecting the China commentary to weigh on TWE's shares on Wednesday. However, the stock was up 3.5 to $7.90 in early trade. TWE said full-year net profit before material items was 15.5 per cent higher than the previous financial year at $470.6 million. Earnings grew 17 per cent to $770.3m, driven by its high-end Penfolds label and a full year contribution from its Californian wine operation DAOU. It also announced a share buyback of up to $200m. Penfolds division earnings rose 13 per cent to $477m, driven by strong growth in its Bin and Icon shipments to China. Outgoing chief executive Tim Ford said it 'continued to face headwinds in a number of markets'. Penfolds managing director Tom King later told analysts on a call it had strong plans for the mid-autumn festival in China in October and was 'feeling pretty good around how the initial collection release has gone down in China'. 'I think we've proven over recent years that we're pretty good at adapting to shifting environments,' he said. 'China is a very dynamic market for sure and things can change very quickly. 'We've got levers that we can pull as demand increases and decreases across our global business.' But Mr Teeger said: 'We think today's incrementally more cautious tone on (China) could lead to some of the China bulls on the stock to moderate their growth expectations. RBC Capital Markets analyst Michael Toner said a key question was whether the softness observed in China in June and July would persist for the remainder of the financial year. Treasury Americas delivered a 33.9 per cent lift in earnings to $308.6m, despite slowing sales for the Snoop Dogg-backed 19 Crimes. Treasury Premium Brands suffered a 27.6 per cent decline in earnings to $55.1m. TWE is forecasting a $50m hit to revenue this financial year from changes to its wine distribution model in California, with its local distributor ceasing operations later this year. It declared a final dividend of 20¢ a share. Mr Ford will leave the company at the end of September to make way for incoming chief Sam Fischer, who was poached from alcohol giant Lion.
AU Financial Review
06-08-2025
- AU Financial Review
The Peter Thiel-backed companies winning big from Trump
Buried in Donald Trump's 'big, beautiful bill' was a provision that will give technology group Anduril an almost-guaranteed slice of the roughly $US300 billion ($463 billion) earmarked to modernise the US' military, defence infrastructure and homeland security. The legislation provides for a $US6 billion expansion of border security technology, a chunk of which will be spent on autonomous surveillance towers — for which the Californian company is currently the only approved supplier.
The Age
04-08-2025
- The Age
Thornbury home sells for $1.52m after auction to only bidder
A three-bedroom Californian bungalow in Thornbury, a popular suburb in Melbourne's inner-north, failed to sell under the hammer following a solitary opening bid of $1.48 million. Despite a strong campaign, four interested buyers and a large turnout on the day, the house at 10 Hobson Street, initially guided at $1.42 million to $1.52 million (later changed to $1.5 million to reflect a private offer) struggled to gain traction, eventually selling post-auction to the only bidder – a couple – for $1.52 million. The property was one of 733 scheduled to go to auction in Melbourne this week. By evening, Domain Group recorded a preliminary auction clearance rate of 71.1 per cent from 519 reported results throughout the week, while 51 auctions were withdrawn. Withdrawn auctions are counted as unsold properties when calculating the clearance rate. Little Real Estate agent and auctioneer Eric Brown said the property had been very popular. 'It was a really busy campaign – we had over 100 groups come through that property, with people saying they really liked the feel of the home, loved the location,' he said. 'Four people said they wanted to buy it, and three attended the auction.' The young professional couple – whose opening bid of $1.48 million was countered by Brown with a vendor's bid of $1.5 million – held out, resulting in the house passing in at $1.5 million. The reserve was $1.53 million. There is no legal requirement for a vendor's reserve to be in line with their property's price guide. In neighbouring suburb, Clifton Hill, a very different auction result netted the vendor $235,000 over reserve after his 20-year-investment property sold under the hammer for $1,215,000. Five young couples competed for the two-bedroom, unrenovated house at 20 Noone Street, said auctioneer and listing agent Steven John Scalise from Little Real Estate, with a young local couple placing the winning bid.
