Treasury Wine Estates Profit Falls 46% as China and U.S. Inventory Reset Weighs on Earnings

Australia’s Treasury Wine Estates reported a sharp decline in first-half earnings, highlighting ongoing challenges in its key China and U.S. markets. The global winemaker announced that underlying net profit after tax before material items and SGARA dropped 46.3% to A$128.5 million ($90.85 million) for the six months ended December 31, compared with A$239.6 million in the prior year.

Despite the steep fall, the result slightly exceeded the Visible Alpha consensus estimate of A$127.8 million. However, the company temporarily suspended its fiscal 2026 interim dividend, emphasizing a strategic move to preserve capital amid softer demand and elevated distributor inventories.

Treasury Wine Estates said shipments in 2025 outpaced underlying consumer demand, leading to excess stock levels across distribution channels in both China and the United States. Management has since taken steps to rebalance inventory, aiming to stabilize sales performance and support long-term growth in its core wine brands.

The earnings pressure was particularly evident in the Treasury Americas division. Net sales revenue in the region declined 28.4% to A$283 million during the first half. The drop was compounded by the unexpected shutdown of a U.S. distributor in California, forcing the company to quickly secure new distribution partners. The disruption further weighed on revenue and operational performance in one of its largest markets.

Investors are closely monitoring Treasury Wine Estates’ recovery strategy, especially as it works to normalize distributor inventory levels and strengthen its position in China and the U.S. wine markets. The company’s focus on capital preservation and supply chain adjustments signals a transitional period as it seeks to restore profitability and rebuild momentum in fiscal 2026.