The Treasury Wine Estates Ltd (ASX: TWE) share price is in the spotlight today as the company outlined its new five-year transformation plan at its 2026 Investor Day, aiming for a more focused brand portfolio and a substantial uplift in financial performance. Among the highlights, TWE is targeting $100 million in annualised cost reductions and expects EBITS of $480–490 million in FY26.
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What did Treasury Wine Estates report?
- FY26 EBITS guidance of $480–490 million
- Annualised cost savings target of $100 million by FY29
- EBITS margin expansion to 25%+ long-term target (FY26e: ~19%)
- Leverage expected to return to below 2.0x by FY28 (peaking at 2.9x FY26)
- Increase in advertising & promotion (A&P) investment to ~10% of NSR by FY28
- No dividend payments until leverage falls under target
What else do investors need to know?
TWE's transformation, branded "Ascent", will sharpen its focus on "Power Brands" and "Regional Heroes", with volume targets for these brands expected to reach 90% of group NSR over five years. The company will progressively divest, retire, or transition non-priority brands to support returns and margin expansion.
Major supply chain transformation is planned, particularly in Australia and the US, aimed at aligning production to long-term demand and improving capital efficiency. This includes divestment of surplus assets and rationalisation of the global network.
Management reported positive momentum in key brands, with Penfolds depletions up 40% in China for the March quarter and strong growth from US luxury brands. Inventory rebalancing is progressing in both China and the US, with the process expected to conclude by FY28.
What's next for Treasury Wine Estates?
Looking ahead, TWE expects to return to revenue growth from FY28, once customer inventory is rebalanced and transformation benefits start to flow. EBITS is forecast to be at least stable in FY27, with progressive margin and return on capital improvements beyond that.
The company intends to increase A&P investment for its Power Brands and maintain disciplined cost controls. Management continues to review opportunities for strategic divestments and further operational improvements, especially in the Americas.
Treasury Wine Estates share price snapshot
Over the past 12 months, Treasury Wine Estates shares have declined 50%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 3% over the same period.
