Treasury Wine pauses dividend after large writedown on US business

By Roushni Nair and Byron Kaye

Feb 16 (Reuters) - Australia's Treasury Wine Estates TWE.AX on Monday suspended its interim dividend after booking a writedown on its U.S. business that resulted in a huge net loss.

Shares in the company, one of the world's top five winemakers by volume and owner of the Penfolds label, finished down 4.4% after sliding as much as 7% at one point.

The company has been hammered by falling demand for wine in China as well as in the U.S., with consumers shifting away from alcohol and grappling with rises in the cost of living. Treasury has also had to deal with distribution problems in California, a key market. The stock more than halved in value in 2025.

On a statutory basis, Treasury swung to a A$649.4 million ($460 million) loss for the half-year ended December after logging a A$770.5 million impairment on its U.S. assets - a somewhat larger writedown than what had been flagged late last year. The result marks its first half-year loss since the company split from the Foster's group in 2011.

But even higher up on its profit and loss statement, the company was clearly in pain. Operating income tumbled 40% to A$236.4 million on a 17% plunge in revenue to A$1.3 billion.

LOTS OF WORK TO DO IN CHINA

Seeking to tackle its problems, Treasury announced in December it was looking to cut annual costs by A$100 million over the next two to three years by trimming channel stock which would steady pricing and rebuild brand momentum.

That plan is progressing well, the company said in a statement.

It said suspending its interim dividend would help preserve capital and bring debt back within its target range - a move analysts at Jefferies called "sensible". It paid a dividend of 20 Australian cents per share for the same period a year ago.

Asked when the company would resume paying dividends, Chief Financial Officer Stuart Boxer said the company was focused on paying down debt and lifting cashflow, "but it is too early to call, at this stage, the timing of those".

"Ultimately, it will be a decision for the board," he said on a call with analysts.

It has also tightened shipments into China to curb parallel imports - where Treasury's premium wines like Penfolds are imported into the country by other companies and are generally sold for far less than those by authorised dealers.

While Treasury had flagged much of the earnings pain in December, Citi analysts noted that depletions - volumes of wine sold to end-users - in China fell 17.2% from August to December, adding that the company "has a lot of work to do" to reignite demand.

($1 = 1.4114 Australian dollars)