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TWE pauses A$200 mln buyback announced in August

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Shares slump 14% to 10-year low

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Withdraws earnings growth forecast for fiscal 2026

(Rewrites throughout, adds analyst comment)

By Christine Chen and Shivangi Lahiri

SYDNEY, Oct 13 (Reuters) - Australia's Treasury Wine

Estates ( TSRYF ) on Monday pulled its earnings guidance for 2026

and paused an A$200 million ($130 million) share buyback, citing

weak sales of its flagship Penfolds wines in China and

distribution challenges in the U.S.

The announcement sent shares of Treasury, one of the

world's top five winemakers by volume, down 14% to A$5.99, their

lowest point in more than 10 years.

Treasury said sales of Penfolds in China had been weaker

than expected due to changing alcohol consumption habits,

including fewer large-scale banqueting occasions.

China has been central to the Melbourne-based

winemaker's growth since Beijing lifted steep import tariffs

that had kept the iconic label off shelves for more than three

years.

"If the performance trends indicated by the preliminary

data continue through F26, Penfolds depletions targets for F26

in China are unlikely to be achieved," the company said.

As a result, it said it was no longer appropriate to

retain Penfolds guidance for low- to mid-double-digit earnings

growth in 2026 and 15% earnings growth in fiscal 2027.

"The complete withdrawal of guidance for Penfolds in

FY26 and FY27 speaks to the high level of uncertainty caused by

evolving consumption dynamics in the Chinese market," RBC

Capital Markets analyst Michael Toner said.

In the U.S., Treasury said its operations had been

disrupted by the exit of its distributor in California, Republic

National Distributing Company (RNDC).

The transition to new partner Breakthru Beverage Group would

cost around A$50 million in sales, it said, with negotiations

continuing over roughly A$100 million of inventory held by RNDC.

The setbacks led Treasury to withdraw its group-wide

earnings forecast for the 2026 fiscal year and pause a planned

A$200 million share buyback programme announced in August. It

already repurchased about A$30 million of shares.

RBC's Toner said the pause on the remainder of the buyback

was "unexpected" but "prudent in our view in the context of

near-term trading uncertainty".

The winemaker said several initiatives were being

implemented to mitigate the impacts of a weaker Chinese market

in the year to June 2026, including pursuing opportunities to

re-allocate product to select customers in other key markets.

Treasury will hold its annual general meeting on

Thursday.

($1 = 1.5333 Australian dollars)