Treasury Wine Estates Ltd Investor Update Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Craig Woolford - MST Marquee - Analyst : Good morning, Stuart -- Sam and Stuart. Jeez, I've got lots of questions but I understand we'll start with one. I'll ask a big one around the benefits or the need to keep the treasury business together. You sit with a portfolio of maybe 16 million, 17 million cases and maybe higher might be 19 million cases, but 15 million of that sits in collective, which is the low margin, lower return on capital part of the business, do you see a benefit of keeping the three discrete segments as they run today together? What are the synergies? What are the reasons? What is the rationale?

Question: Craig Woolford - MST Marquee - Analyst : And just -- I mean balance sheet doesn't sort of reflect this. But are you saying you would consider acquisitions to target the right segments? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 11:00PM, TWE.AX - Treasury Wine Estates Ltd Investor Update

Question: Craig Woolford - MST Marquee - Analyst : Understood. Thank you.

Question: Michael Simotas - Jefferies LLC - Analyst : Morning everyone. I'm just trying to get a better handle on what today's update means for the underlying go-forward earnings base of the business. And hopefully, we can talk about the two big ones, Penfolds and Treasury Americas. And I just want to make sure that we are getting our understanding right on the one-off impacts of resetting inventory that's already in the market or effectively giving back some of the earnings that were booked through Treasury's P&L over the last couple of years that probably shouldn't have been there based on the demand profile. So Penfolds will do about $400 million of EBITs this year. Within that, there is the inventory adjustment of $215 million NSR, some of that this year, some of it next year. Is that the right earnings base for the business? Or is there a drag from that adjustment in this year? And then I'd like to have a similar conversation about the US as well.

Question: Michael Simotas - Jefferies LLC - Analyst : Okay. Well, so just to clarify on the Americas. So if I lay out all the pieces that you've given on this call and previous updates, so there was initially a $50 million NSR impact from distributor transition, plus another $100 million NSR to deal with the inventory sitting in California, then another $125 million of NSR adjustment split over two years and then a spillover of DAOU synergies of USD10 million into future years. Should we think about all of that as one-off?

Question: Michael Simotas - Jefferies LLC - Analyst : And the DAOU synergies, will you get them eventually?

Question: David Errington - Bank of America - Analyst : Good morning Sam, good morning Stuart. I'd like to say Merry Christmas, but Santa has given us a gift that I don't really want at the bottom of my tree. I'm not being smart there, but anyway. Look, Sam, one question, it's a big one, but one question that concerns me from today, all powder to you for stepping up and having the courage to do what you're doing in rebasing. I think that, that's what a good new CEO is expected to do. But the one area that disappointed me is on slide 7, where you've come out and you've said the US remains significant opportunity requiring stronger execution. Sam, I've seen three US -- I've seen three TWE CEOs lose their job over the US I don't want to see a fourth. Why are you committing to the US, why? Because to me, it sounds like the US is in real trouble because you don't have the flexibility in the supply. You don't have the capability of reducing inventory coming in. You've got fixed-term contracts, you've got vineyards that your own. This, to me, sounds like you're going to have to basically do what you did in 2013 and buy back inventory, which is another layer of disappointment. What's the game in the US, Sam? Because you've got a wonderful business in Penfolds. What's the deal in the US? Why can't -- it's just so frustrating, $40 million in a half, Sam, for luxury when you've paid $2 billion in the last three years on Frank Family and DAOU, $40 million. And then Treasury Collective, the US is going backwards in depletions going backwards so much. The exasperation of sticking with the US, I've covered this company for 30 years. You've never got the US right. So why make a comment that Treasury Americas has got opportunity. It's just down to execution. I mean opportunity for what? What's the opportunity there other than just releasing things like you've done today on us. If you could go through that, and I know all power to you for doing what Penfolds is doing, all power to you. But the US, please.

Question: David Errington - Bank of America - Analyst : But that structure in there, Sam, that structure where you don't have the flexibility that you do in Australia. That execution, I know you got to give us more than just improved execution. There's got to be something fundamentally wrong with TWE operating a US asset. It just can't just be execution. It's got to be more than that. I'll leave it there. I know, but I just can't accept it's execution. It's got to be something more. $40 million for half in luxury is just not good enough. It's not acceptable.

Question: David Errington - Bank of America - Analyst : Okay. All power to you, Sam. Good luck.

Question: Caleb Wheatley - Macquarie Group Ltd - Analyst : Morning, Sam and Stuart. Relatively tough act to follow. Just in terms of sort of managing the branded initiatives you're looking at, clearly, from a consumer point of view, if there is this sort of broader destocking process happening, particularly for Penfolds in China and in the US, what sort of other initiatives especially are going to be running to sort of make sure that the value of the brand isn't diminished as you work through that process. And so you're in the right position once you get through the next two years to sort of drive that luxury and ultra luxury growth again.

Question: Caleb Wheatley - Macquarie Group Ltd - Analyst : Yeah, alongside what may be a period of fairly significant discounting as distributors are working through sort of rightsizing their inventory.

Question: Caleb Wheatley - Macquarie Group Ltd - Analyst : Okay, thank you.

Question: Phillip Kimber - E&P Capital - Analyst : Hi, my question is just sort of a little bit similar to Shaun's, but more on outside of China and parallel importing. The fact that depletions have been well below shipments, and it feels like it's been maybe for a little period of time. Are you comfortable you've got the systems and the processes to keep track of that? Because if we just take the US, I mean, all the data that we see, and I know we don't see the whole playing field, do you know the IRR and Nielsen data. But I mean, they've been horrible for a number of good 12 months. And yet it feels like we're only now saying, well, actually, we've been shipping ahead of depletions. So I'm just -- I'm wondering if the systems in that are good enough to pick it up a lot earlier than it seems to get being picked up at the moment? Thank you.

Question: Phillip Kimber - E&P Capital - Analyst : Okay, thanks guys.

Question: Ben Gilbert - Jarden Group Ltd - Analyst : Hi, good morning guys. Thanks for taking the time. Just sort of following on from a couple of the other questions. Just in terms of, I suppose, sort of coming to the business and taking a bit more of a sort of a harsher lens in terms of optimism because obviously, as we talked on the call, the results, you said that if there was any impact to demand in China, that wouldn't have any impact to guidance for Penfolds, obviously had a buyback going a few weeks ago, which obviously seems to change materially. I'm just interested in terms of how you come in and sort of change the mentality in terms of the optimism around planning and sort of plan for the worst, hope for the best. And if you do think that you've been sort of pessimistic or negative enough in terms of this rebase that this will be the bottom, assuming that conditions from a top line perspective don't get worse from here. I'm just interested in how you've changed that mindset. Do you think you need to change that mindset within the group?

Question: Ben Gilbert - Jarden Group Ltd - Analyst : So this -- sorry, just finally, does that then lead to simplification? Is that what needs to be? I know you talked about M&A feels opportunistic, but obviously been more recycling. Do you think that the business there seems to be simplified materially in terms of folks? I know you've obviously already done an iteration, but allow you to be more nimble or allow you to really lean in sort of a bit following from Mary's question around whether opportunities to derisk to really sort of lean into the Penfolds and we do have some really strong opportunities. Do you think it's just got too complicated?

Question: Craig Woolford - MST Marquee - Analyst : Just a follow-up around that cost-out program. Can I just -- how would you like the investment market to interpret it? Two things or a couple of things. One, around the timing of the benefit. A lot of cost-out programs that companies announce, we never really see it in the P&L because it gets absorbed by other issues. So are you saying $100 million benefit to EBIT? Or is it to be thought of in a different way? And the other part to that is what are the significant items or costs we should expect in implementing the Ascent program? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 11:00PM, TWE.AX - Treasury Wine Estates Ltd Investor Update

Question: Mark Southwell-Keely - Select Equities - Analyst : Thanks very much for taking my call. Can you hear me?

Question: Mark Southwell-Keely - Select Equities - Analyst : Would you be open to reviewing the pricing architecture. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 11:00PM, TWE.AX - Treasury Wine Estates Ltd Investor Update

Question: Sam Teeger - Citi - Analyst : Look, I think it's sensible that you're rightsizing inventory, but how much of the inventory issues are a function of short-term incentives based on NSR and EBITS really unless we see incentives evolve and take a longer-term focus, then won't we be back here at some point in the future?

Question: Caleb Wheatley - Macquarie Group Ltd - Analyst : Makes sense. And then kind of following on from that. What I do find slightly concerning is that we and other market participants have been able to consistently identify weak trends and market challenges prior to hearing about them from the company, which does suggest there are some deficiencies in potentially communication between the company's overseas offices and the head office in Melbourne. In fact, we're hearing about some of these things while the company was buying back stock. And look, Sam, I'm wishing you all the best in the new role, but do you think the head office gets adequate, accurate and timely communication from its offshore offices and you'll need that to make the right decisions for shareholders going forward? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 11:00PM, TWE.AX - Treasury Wine Estates Ltd Investor Update

Question: Caleb Wheatley - Macquarie Group Ltd - Analyst : Great, thanks. Wish you all the best.

Question: Michael Simotas - Jefferies LLC - Analyst : Thanks for taking another one. How should we think about cash realization over the next couple of years as you look to rightsize your intake? I mean normally, that should be a cash benefit, but just trying to understand the offsets around money you might need to spend in the Americas business to make those adjustments as well as one-off costs for TWE Ascent?

Question: Michael Simotas - Jefferies LLC - Analyst : Okay. But it doesn't sound like there's going to be a step-up in operating cash realization?

Question: Michael Simotas - Jefferies LLC - Analyst : Yeah, okay, thank you.

Question: Jason Palmer - Taylor Collision - Analyst : Thank you, thanks for your time, Stuart and Sam. My question is a follow-on from Michael's first question around the inventory rebalancing, both in Penfolds and the Americas. I'll ask it a bit more direct. How much of the 215 NSR rebalancing is embedded in the first half of '26 for Penfolds? And how much of the rebalancing of the 225 combined program in Americas relates to the first half?

Question: Jason Palmer - Taylor Collision - Analyst : Okay. I'm struggling reluctance to tell us this because we're all trying to work out what the base business might be. And I'm trying to work out if you just -- you're reluctant to tell us because you don't know or there's another reason?

Question: Jason Palmer - Taylor Collision - Analyst : Okay. Just a follow-up question in respect of that. Like what level of conviction do you have around the Americas business, that's not a cabinet rebasing to that business? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 11:00PM, TWE.AX - Treasury Wine Estates Ltd Investor Update

Question: Jason Palmer - Taylor Collision - Analyst : Okay, thank you for your time.

Question: Phillip Kimber - E&P Capital - Analyst : Hi guys, thanks for taking a follow-up. I was going to ask about the US as well. So if we put the $125 million that is the new information that you've given us today to one side, the $100 million NSR impact relating to the distributor change. I mean -- so what does that mean really? That mean -- does that mean they're not buying inventory in other states because they're using the inventory that they've got in California that they no longer need? And therefore, that $100 million, I mean, could that all sort of be hitting in the first half? Or is it spread across the year? I'm trying to understand specifically the $100 million that you've called out NSR impact from changing the distributors and how that flows?

Question: Phillip Kimber - E&P Capital - Analyst : But am I right in thinking that $100 million is just -- the sales impact of $100 million, is that RNDC are no longer -- are using inventory that they had in California that they're moving to other states. So therefore, they're just not buying as much from you at the moment until that clears and then hopefully, they'll go back to a normal rate of buying. Am I understanding that right? Because that would imply more of it's going to happen upfront than it's going to be more first half skewed. That's what I'm trying to understand. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 11:00PM, TWE.AX - Treasury Wine Estates Ltd Investor Update

Question: Phillip Kimber - E&P Capital - Analyst : Okay, all right, thank you.