S&P/ASX 200 Index (ASX: XJO) stock Treasury Wine Estates Ltd (ASX: TWE) is shrugging off the selling heat today.
Shares in the global wine company closed yesterday trading for $11.59. In morning trade on Tuesday, shares are changing hands for $11.79 apiece, up 1.68%.
For some context, the ASX 200 is up 0.43% at this same time.
Here's what's happening with Treasury Wine shares today.
ASX 200 stock shakes off impairment charges
Treasury Wine shares are in the green today despite the ASX 200 stock announcing it will recognise a non-cash impairment charge of $354 million ($290 million after tax) in its FY 2024 full-year results.
This comes after the latest review of the carrying value of the Treasury Wine's assets as part of its annual impairment testing process. The impairment will be treated as a material item in relation to the Treasury Premium Brands (TPB) division.
Management said the impairment primarily involves a $115 million write-down of goodwill and a $229 million write-down of brands. Those brands are mostly commercial brands which include Wolf Blass, which the company acquired in 1996, Yellowglen, which was also acquired 1996, Lindeman's, which was acquired 2005, and Blossom Hill, which Treasury Wines acquired in 2015.
Investors will have noted that these commercial brands contributed less than 5% of the gross profit for the ASX 200 stock in FY 2024.
Management said:
The changes to the carrying value assessment reflect moderated top-line expectations as a result of challenging market conditions for commercial wine, across all markets, and the underperformance of TPB's brands relative to the category at these commercial price points.
These adverse trends have offset the benefits from TPB's strategic focus to premiumise its portfolio, where it has delivered a three-year NSR CAGR of 10% for its priority Premium brands, which include Wynn's, Pepperjack, Squealing Pig and 19 Crimes.
Atop the impairment, Treasury Wine also announced it intends to divest its commercial brand portfolio together with an update on its unaudited FY 2024 EBITS, which were said to be in line with expectations.
Unaudited EBITS before material items for the ASX 200 stock are expected to be $658.1 million. That's up 12.8% year on year.
Treasury Wine is scheduled to release its full-year results on 15 August.
Treasury Wine share price snapshot
The Treasury Wine share price was on a strong run in 2024, right up until Friday.
But even following two days of heavy selling (alongside the broader market), shares in the ASX 200 stock remain up 8% in 2024.
