Stock of the day: Treasury Wine Estates
Amid strategic overhaul, Treasury Wine Estates announces a substantial A$290 million impairment, steering towards premium segments and divesting less profitable brands to bolster its market position and ESG commitments.
[AI generated]
This video was created on 6 August for IG audiences by ausbiz.
Stock of the day: Treasury Wine Estates (ASX: TWE)
TWE reports significant impairment amid strategic shifts
Treasury Wine Estates (TWE) has disclosed a substantial non-cash impairment of A$290 million in its annual results, signaling a shift in strategy towards its more profitable luxury brands. This move aligns with efforts to enhance its environmental, social, and governance (ESG) commitments despite recent market challenges, particularly from China's stringent import restrictions.
Strategic divestment and financial outlook
TWE's financial strategy includes the divestment of its less lucrative commercial brand portfolio, which includes well-known labels such as Wolf Blass, Lindemans, and Yellow Glen. These brands contributed less than 5% to the company's gross profit in the fiscal year 2024. This divestiture is seen as an alignment with TWE's focus on its premium wine offerings.
Despite the significant impairment charge, TWE anticipates earnings before significant items to be A$658.1 million, demonstrating resilience in its operational performance, particularly in the US market, which has shown robust growth amidst the backdrop of global economic uncertainty.
Market response and analyst perspectives
Following the announcement, TWE's stock experienced a modest rise of 1.5%. Analysts have expressed mixed reactions to the company's strategic decisions. While some are optimistic about TWE's refocus on higher-margin luxury wines, others remain cautious, citing the stock's price-to-earnings (PE) ratio of 25.8 and a relatively low return on capital at 5.6%.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Explore the markets with our free course
Learn how shares work – and discover the wide range of markets you can trade on – with IG Academy's free ’introducing the financial markets’ course.
Put learning into action
Try out what you’ve learned in this shares strategy article risk-free in your demo account.
Ready to trade shares?
Put the lessons in this article to use in a live account – upgrading is quick and easy.
- Trade over 16,000 popular global stocks
- Protect your capital with risk management tools
- React to breaking news with out-of-hours trading on 70 key US stocks
Inspired to trade?
Put your new knowledge into practice. Log in to your account now.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.